THE TAX MAN
It is time for many Texans to breathe a sigh of relief – tax day has come and gone. This year on April 15, American taxpayers reaped the benefits of last year's historic tax cut legislation by keeping more money in their pockets.
Sweeping Tax Relief
The law reduced tax rates across the board, enhanced retirement savings, repealed the death tax and eliminated the marriage penalty. Basically, if you are a taxpayer – you got tax relief. Because we lowered the tax rates mid-year, Americans are getting larger-than-expected tax refunds this spring. The average check is expected to be nearly $2,100 — a 12 percent increase over last year.
Before September 11, the American economy was already in a slump – after the terrorist attacks it risked spiraling out of control. Fortunately, the tax relief kicked in just in the nick of time. Many people, including Federal Reserve Chairman, Alan Greenspan, believe if it weren't for the tax cuts, we would be in a deep recession. But instead, our economy is recovering.
One of the first benefits of the legislation was the tax rebate checks that began arriving in mailboxes across the country last August. Individual taxpayers received up to $300 rebate checks, while married couples received up to $600. This rebate alone funneled more than $40 billion back into the economy and supported consumer spending at a critical time.
But these tax cuts were not a one-time event. The tax rates are scheduled to continue dropping, child credits will increase, and retirement savings options will grow.
Making it Last
However, when we passed the legislation, procedural rules in the Senate required that we put the tax cuts in place for only 10 years. Currently the law will expire on December 31, 2010, and the tax relief will be discontinued. Congress must act to make the tax relief permanent. Texans need a predictable and stable tax code in order to better plan for their futures and make good decisions about retirement savings.
I am particularly concerned with protecting the repeal of the marriage penalty and making sure the death tax is buried forever. Both taxes hurt Texas families.
The marriage penalty has long been an unjust tax on married couples who pay an average of $1,400 more if they file jointly than they would pay as individual filers. I have been a champion of correcting this inequity since I was elected to the Senate in 1993. In fact, Congress passed my proposal twice before – but then-President Clinton vetoed it both times. Our tax laws should encourage marriage – not penalize it. When the new tax cuts are fully phased in, 43 million married couples will experience a significant reduction in their taxes. Here in Texas, couples will save $4.5 billion over the next 10 years.
The phase-out of the death tax is another provision that must be made permanent. Our tax code has long burdened families whose loved ones handed down a family business, ranch or farm. Families were faced with taxes so steep that they often had to sell the properties to pay the IRS. Years of diligence, hard labor and savings were washed down the drain by this unfair tax. The new law allows more Americans to keep these businesses in the family where they belong.
I was proud to support the most significant tax relief of the last two decades. Now, I am committed to making sure it lasts.
April 17, 2002