The last few years have been rife with the ingredients of an economic disaster, but despite a recession, terrorist attacks at home and abroad, corporate scandals and war, our economy is getting stronger. Inflation, interest and mortgage rates are near historic lows and homeownership is at the highest level ever. Stock market wealth has increased by more than $4 trillion in the last year, and unemployment has dropped to 5.6 percent recently - below the average rate of the 1970s, 1980s and 1990s.
Making the Tax Relief Permanent
These numbers are good and they are getting better. But the positive news could be short lived unless Congress acts to make the tax relief permanent. Unfortunately, when we passed the Jobs and Growth Act in 2003 we were forced to sunset on the tax cuts and many of them will begin to fade away at the end of this year. After December 31, 2004, the expansion of the 10 percent bracket and alternative minimum tax relief will disappear. Even more frustrating is the fact that the marriage penalty - one of the most egregious elements of our tax code - is coming back, unless we act again.
The Marriage Penalty
One of my highest priorities in the U.S. Senate has been to relieve American taxpayers of the punitive marriage penalty. Last year we raised the standard deduction and enlarged the 15-percent tax bracket for married joint filers to twice that of single filers. This provision will save 34 million married couples an average of almost $600 on this year's tax bills. But, in 2005, marriage will again be a taxable event for millions of Americans. Without relief, 48 percent of married couples will again pay more in taxes. While I continue my efforts to make marriage penalty relief permanent, I have introduced legislation to extend last year's victory for married couples for one year, through 2005. We must make sure we do not backtrack on this important reform.
Fairness for Texans
As we look at making the tax relief permanent, we must also strive to ensure basic fairness for all Americans. Unfortunately, for the last two decades Texans have been singled out by the federal government. In 1986, a landmark tax reform law eliminated the deduction for state and local sales tax, but not the deduction for income tax. As a result, taxpayers from states like Texas, who pay sales tax but no income tax, have been penalized. The philosophy behind these deductions is simple and straightforward: people should not have to pay taxes on their taxes. The money given to one level of government should not be taxed by another level. I have introduced legislation to address this inequity and am hopeful my colleagues will agree that Texans - and residents from the other six states with no income tax - aren't treated unfairly.
These are just a couple of the ways I am working in Washington, D.C. to restore equity to our tax code. Hard working Texans deserve to keep more of their own money. Last year proved you know how best to spend your dollars and that tax relief creates jobs, and strengthens our economy.
April 2, 2004
