Statements on Introduced Bills and Joint Resolutions
Floor Speech
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Mr. CORNYN. Mr. President, today I am introducing the Economic Growth and Jobs Protection Act of 2010. This legislation would repeal the 3.8 percent tax on investment income that was included in the Health Care Reconciliation Act of 2010, P.L. 111-152, signed into law by the President earlier this year. I am pleased that Senator Roberts and Senator Crapo are cosponsors of this legislation.
We know that taxpayers already face the largest tax increase in history when the 2001 and 2003 tax relief expire at the end of the year. Unless Congress acts, in less than 150 days: the highest individual tax bracket will rise from 35 percent to just under 40 percent; people in the lowest tax bracket will see a 50 percent tax increase, from 10 percent to 15 percent; the marriage penalty will increase; the child credit will be cut in half; and taxes on capital gains and dividends will increase. In other words, every taxpayer will pay higher taxes to Washington.
But while taxpayers may be concerned about the upcoming tax shock, many may not be aware of another unpleasant surprise that will soon follow. The Health Care Reconciliation Act that was jammed through the Senate along partisan lines includes a $123 billion tax on the capital gains, dividends, rents, and interest earned by certain taxpayers. Enacting this permanent tax hike was a mistake then and is a mistake now. It will discourage savings and investment; it will reduce productivity and will depress wages and the standard of living for millions of Americans. According to the Institute for Research on the Economics of Taxation--a non-profit economic policy research and educational organization, a 2.9 percent tax would depress economic growth by 1.3 percent and reduce capital formation by 3.4 percent. The damage on job and economic growth would be even greater from a 3.8 percent investment tax.
Simply put, increasing taxes on investment income is a job killer and increases uncertainty at a time that the Chairman of the Federal Reserve has told Congress that the economic outlook is ``unusually uncertain.'' Taxpayers, including small businesses, are already scheduled to get hit with the largest tax increase in history in less than 160 days if Congress fails to act. In fact, the top tax rate on capital gains will eventually be 23.8 percent as the rate bounces back to 20 percent from 15 percent. And the top tax rate for dividends will eventually rise to 43.4 percent.
Why do we want to pile on the backs of working families and job creators with more taxes that do nothing to create jobs at a time that the national unemployment rate remains 9.5 percent and where in some States, such as Nevada, there is record unemployment? We know the key to job creation is to grow the economy and allow small businesses to flourish, invest and create jobs.
In fact, according to the Federal Reserve Bank of Boston, we will need several years of very strong growth to reach 5 percent unemployment. For example, to reach 5 percent unemployment by the end of 2013, the economy would need to average 5 percent per year. To reach 5 percent unemployment by 2015 would still take growth of 4.2 percent a year. This is just one reason, that during the health care debate I offered a motion that would have directed the Senate Finance Committee to report the bill back without the 3.8 percent tax on the investment income. Although my attempt to strip out this job-killing tax fell short, I want to take this opportunity to note that 6 of my colleagues on the other side of the aisle supported my motion.
Not only will this legislation protect jobs and the investment security of taxpayers, it will also make sure that Congress restores one of the President's campaign promises. On September 12, 2008, then-candidate Obama promised the American people that, ``Everyone in America--everyone--will pay lower taxes than they would under the rates Bill Clinton had in the 1990s.'' But when combined with the President's budget proposal, this additional tax on investment will raise taxes on many Americans higher than they were under the rates President Clinton had in the 1990s.
I ask that my colleagues support this legislation that will repeal this job-killing tax on small business investment, and thus will protect economic growth, jobs, and the retirement savings of taxpayers. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be printed in the RECORD,
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