On the heels of last week’s high-profile action in the US Senate on tax policies enacted by Presidents Bush and Obama, the US House of Representatives is voting today on multiple proposals designed to address the expiration of $4.5 trillion dollars in tax cuts in January 2013. At stake is the fairness of our tax system and the ability to achieve a balanced approach to the ongoing fiscal challenges our country faces, one that includes revenue.
There are three proposals that appear likely to be considered.
In voting on H.R. 15, the House will consider elimination of Bush-era tax breaks on incomes over $250,000 per year and the one year extension of tax breaks for families earning less than $250,000, a group making up 98% of North Carolinian taxpayers. In eliminating the tax breaks for the wealthiest 2% of Americans, the country will be better positioned to tackle our long-term fiscal challenges by saving nearly $1 trillion over the next decade.
Important as well are the extensions of key middle- and low-income income tax provisions signed into law by President Obama. This legislation would ensure that North Carolina’s working families will continue to receive Child Tax Credits worth more $800 per family, Earned Income Tax Credits (EITC) worth $500 per family, and the American Opportunity Credit, which assists millions of American college students. It is estimated that more than 500,000 families in North Carolina would benefit from the extension of the Child Tax Credit and EITC alone.
In contrast, however, the second plan under consideration by the House—H.R. 8—will extend for one year all of the Bush-era tax policies, including tax breaks for the top 2%those with incomes over $250,000. At the same time as it keeps in place tax cuts for the wealthiest Americans, this plan allows all of the tax credits for middle and low-income working families to expire, affecting 13 million Americans.
A third proposal, HR 6169, would provide for an expedited procedure for considering a revenue neutral tax reform legislation that flattens the federal personal income tax structure, reduces the corporate income tax, and purportedly attempts to pay for these tax reductions by closing various tax loopholes and eliminating tax expenditures. In practice, this may lead to deep tax reductions for high-income Americans and the elimination of important tax credits for millions of middle- and low-income Americans.
These upcoming votes will be critical in setting the stage for discussion of the fairness of our tax system and will have a significant impact on North Carolinians. To get back on track, it will be critical that Congress end the tax breaks for the wealthiest 2%.