Senator McConnell's Op-ed on Tax Day 2007

Statement

Paying the taxman every year, at about this time, is already an occasion for dread in most Kentucky households. Nobody likes paying taxes. But if some in Washington have their way, future tax bills will make this year's look like pocket change.

Washington Democrats recently unveiled their first budget since taking control of Congress in last year's elections, and they proposed the single biggest tax increase in American history—nearly $1 trillion, raising taxes on every single taxpayer.

Young or old, married or single, retired or working, rich or poor—by turning back years' worth of tax relief legislation passed by Republicans in Congress, this new budget has your wallet in its crosshairs.

What would it mean to Kentucky families if these Washington liberals' budget policies become reality? The best way to illustrate that is to look at the form many of you just put in the mail, the 1040, and go through it line by line.

Line 2: Checking the "married" box, like half a million Kentucky couples, will incur a marriage penalty as the $3,400 deduction is chopped by at least $1,360, and tax rates kick in earlier for married couples.

Line 6: The personal exemption of $3,300 will be whittled down, to as low as $0 for some Kentuckians.

Line 9: If you have investments, watch out for higher rates on dividends, which could double from a top rate of 20 percent to nearly 40 percent. Because these are common sources of retirement income claimed by more than half of all seniors, their income will be drastically reduced.

Lines 13 and 14: Kentuckians with investments should also beware higher taxes on capital gains. They'll jump from 15 to 20 percent.

Line 33: Some middle-income Kentucky college graduates will see their student loan interest deduction cut; others will lose it entirely.

Line 44: More than 1.2 million taxpayers across the state who currently enjoy a low 10 percent tax bracket will see their rate jump to 15 percent, an increase of 50 percent. Every other rate will go up, too.

Line 45: The higher "alternative minimum tax" will dramatically increase taxes for as many as 243,000 people across the state, compared to just 24,000 in 2004—ten times more than before.

Line 48: The child and dependent care credit gets chopped from $1,050 to $720 per child for moderate-income families—a cut of 31 percent.

Line 53: The current child tax credit many parents rely on will be slashed in half, from $1,000 to $500. Over 380,000 Kentucky families with children will feel this blow to their pocketbook.

All of this extra money that Kentuckians will send to Washington, and not invest in their own communities, will cost Kentucky an estimated 13,000 jobs. Millions of working families with children will see their taxes increase by nearly $3,000 annually.

As amazing as these tax hikes seem, they've been tried before. The last time Democrats controlled Congress, over a dozen years ago, they passed a budget imposing on the American people what was then the biggest tax hike in history—about one-third the size of the increase they are proposing now.

Republicans recognized that the best economic policy was to lower tax rates, get out of the way and let the great American economy get to work—so we did, and the results that followed speak for themselves. Democrats in Congress inherited from Republicans a booming economy with low unemployment and robust job growth.

Even despite 9/11, despite a recession, and despite a war, our economy has produced over 7.2 million new jobs since August 2003, more than the entire European Union and Japan combined.

You'd think some would have learned from America's economic success. Or you'd think they'd at least have learned after what happened to them the last time they passed a massive tax increase. But now every taxpayer will share the pain. Who ever thought that Tax Day 2007 might one day be looked back on with fond nostalgia?

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