In trying to right the ship in stormy economy, nation is taking on water

Earlier this week, President Barack Obama unveiled his framework of an agreement regarding tax cuts due to expire at the end of the year. It was his attempt to right the nation’s ship in a stormy economy. Unfortunately, it means we’re going to take on water — at least for the next two years.  

The tax cuts for the wealthy included in the pending agreement are projected to cost $900 billion, $100 billion more than the Recovery Act. That cost will be borne by the vast majority of Americans who fall far below the wealthy tax brackets. In fact, 79 percent of the $40 billion a year it will cost to extend the top rates will go to 315,000 households that make more than $1 million annually. 

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Like many Democrats in Congress, I am still reviewing the agreement. But I have seen enough to know the pending agreement includes many items that I have fought for on numerous occasions.  Extending unemployment benefits, reducing payroll taxes and expanding the availability of the earned income tax credit are all ways the federal government can help working Americans. 

Still, the plan falls short of what I proposed in September. 

I wanted to give everyone a tax cut — from the lady working behind the deli counter to Donald Trump. 

My plan would have continued the cuts for five years on the first $200,000 of every individual’s income or the first $250,000 of every family’s annual income.

So, theoretically, if Mr. Trump files an individual tax return, the tax cut would have applied to the first $200,000 he made this year.

My proposal also included a five-year extension of the current tax rates on long-term capital gains and qualified dividends. This extension would have benefitted seniors’ retirement holdings and help promote investment in small business — the engines of our economy.

I also called for the current tax rates for individuals and joint filers making under $500,000 annually to be extended for one year. The result would have been that 99 percent of all individuals and small businesses’ tax rates would not change, and only income in excess of $500,000 would be taxed at the same rate it was in the 1990s.

The Joint Committee on Taxation — the nonpartisan, top congressional authority that assists the House and the U.S. Senate on tax legislation — gave its preliminary review of my plan last week. It confirmed that my plan would not only have cost less than the plan currently proposed, it would have also allowed Congress to address the national deficit by winding down bonus tax breaks that benefit only a small fraction of our country.

Renewing the tax cuts for the middle class is an idea that had strong bipartisan support in Congress when I proposed this plan at the end of September. No wonder. Nearly every American would have benefitted from this extension. The $200,000/$250,000 threshold applies to 98 percent of individuals and small businesses.

We didn’t act when we should have, and now we find ourselves in the position we are in today — bargaining with hard-liners over whether the federal government should do its best for the vast majority Americans. 

The voters of New Jersey’s eighth congressional district sent me to Capitol Hill to fight for American workers and their families, not to borrow against their grandchildren’s futures in order to give the nation’s wealthiest people a tax break. 

Moving forward, I call upon my colleagues on the House Ways and Means Committee and throughout the Congress to look beyond the next two years in order to create a greater benefit than a tax cut. It is time for us to begin the heavy lifting on significant national tax reform. 

The American people need and deserve a tax policy that is equitable, economically efficient and able to weather any economic storm.  

Rep. Pascrell is a member of the Ways and Means Committee.