On April 15th, millions of Americans dutifully filed their 2009 federal income tax returns. Over the past 18 months, our nation faced record unemployment, lost income, and home foreclosures. Amidst these uncertain times, American families and small businesses have tightened their belts and made tough financial decisions in order to maintain a responsible budget.
On Tax Day, Congress was reminded of the budget sacrifices our constituents are making, and we should renew efforts to simplify our tax system and lessen the burden on hard-working Americans. The tax cuts of 2001 and 2003 helped boost employment and economic prosperity. I’m especially pleased that we finally got tax parity with other states by making Texas state sales tax dollars deductible on federal income tax returns.
Texas is one of only eight states that do not have a state income tax. Having no state income tax has fostered a thriving business climate. However, in lieu of income taxes, we do have a state sales tax. Because we were unable to deduct the state sales tax, Texans were penalized when filing federal tax returns. In 2004, Rep. Kevin Brady (R-Houston) and I finally corrected this injustice by passing legislation to allow state and local sales tax deductibility for two years. We have also been able to enact successive extensions every few years. Deductibility of state and local sales taxes provides an average return of about $600 per Texas family. We are now working to make this deductibility permanent so that residents of Texas and other no state income tax states are not unfairly disadvantaged in the federal tax code.
I am also actively pursuing action to ensure that the marriage penalty, the most egregious, anti-family provision in the federal tax code, never returns. The marriage tax penalty pushes married couples into a higher tax bracket than two single wage earners taking in the same combined income. As a matter of principle, the IRS should never do anything to discourage one of the most fundamental institutions of our society: marriage.
I have been fighting since 2001 to reverse this inequity. And as part of the tax cuts of 2001, Congress eliminated the marriage tax penalty for most married couples. Before this tax relief passed, more than 25 million American married couples paid an average penalty of $1,141 just because they were married! I am proud that I was able to help repeal that outrage. However, this marriage penalty relief will expire at the end of this year. I will again lead the effort to pass a permanent extension so that American families will not face this outrageous tax penalty again.
Unfortunately, the Obama Administration and the Democratic leadership in Congress are pushing higher taxes and even more deficits in order to finance their unprecedented spending programs. The American people want an end to this reckless spending that is hampering our economic recovery. And the American people want tax relief. Presidents from both parties, including Presidents Kennedy, Reagan, and Bush, have successfully employed tax relief to create jobs and spur economic activity.
That is why we must extend the tax cuts that are scheduled to expire in 2011. If we allow the tax cuts of 2001 and 2003 to expire, 43 million families with children would be forced to pay $2,300 more in taxes each year; more than 18 million seniors will owe $2,200 more in taxes; and 27 million small businesses will owe $4,100 more in taxes. At this time of economic uncertainty, the last thing we should be doing is raising taxes. I am committed to working to make the tax cuts permanent, giving real relief to American taxpayers. If these tax cuts expire – April 15, 2011 will be even worse!
Kay Bailey Hutchison is the senior U.S. Senator from Texas and is the Ranking Member of the Senate Committee on Commerce, Science, and Transportation.