Like many of my Democratic colleagues, I have long supported making the Bush-era tax cuts for the middle class permanent while letting the tax cuts for the ultra wealthy expire. But unlike many in Washington, I have urged leadership of both parties to compromise on this issue. Finally, after months of gridlock and finger-pointing from both parties, President Obama and Republicans in Congress have reached an agreement to do what is best for the American people – prevent a middle class tax increase on January 1 by agreeing to extend tax rates across all income levels for two years.
I support this compromise because job creation is my top priority. Although I do not believe that extending tax cuts for the ultra wealthy will create jobs, and I’m concerned that doing so will unnecessarily add to the debt, I believe a two-year extension is a fair compromise and that the overall agreement contains significant job creation measures. As we continue on the road to recovery, we will be able to revisit the tax rates for the wealthiest Americans when the economy is on stronger footing.
While many of my fellow Democrats believe that this compromise is a giveaway to the rich, nothing could be further from the truth. The bipartisan agreement forged by President Obama and Congressional Republicans delivers several key victories for American families and small businesses in addition to the extension of current tax rates:
• An Employee-Side Payroll Tax Cut: The compromise includes an employee-side payroll tax cut of 2 percent for over 155 million workers – providing additional middle class tax relief of about $112 billion next year.
• Extension of Unemployment Benefits: The compromise extends emergency unemployment benefits for 13 months, preventing an estimated 7 million Americans from losing their benefits over the next year as they continue to search for work.
• 100 Percent Expensing: The compromise includes a proposal, similar to legislation I introduced earlier this year, to allow businesses to expense 100 percent of their equipment investments in 2011, potentially generating more than $50 billion in additional investment, which will inject demand into the economy and fuel job creation.
• Estate Tax Relief: The compromise includes an increase in the estate tax exemption to $5 million per person and $10 million per couple, with a top tax rate of 35%. I have advocated for these levels since coming to Congress, because they will ensure that family farms and small businesses in our region are not subject to the tax. Recent figures show that only 1,379 people were subject to this tax in the entire State of New York when the exemption level was $2 million. I expect that by increasing the joint exemption to $10 million, a small fraction of filers will be affected in New York’s 23rd congressional district.
• Research & Development Tax Credit: The compromise includes a two-year extension of the R&D tax credit and other tax incentives to support business expansion.
Middle-class families and small businesses are the backbone of the American economy. They have been hit hardest by the economic downturn, and provisions in this compromise may be the difference that allows them to make ends meet and ensures the economy continues to recover. That is why I’m urging my colleagues in Congress to not only pass this compromise, but to make it the first of many bipartisan agreements that move our country forward in the coming year.