Will Taxpayers Go Cliff Diving?
August 29, 2012
Everybody in Washington, DC is talking about the fiscal cliff but nobody is doing anything about it. That is very reminiscent of Mark Twain’s old adage about the weather when he quipped, “everybody talks about the weather but nobody does anything about it.” The only difference is that politicians have an opportunity to act and prevent the country from going over the fiscal cliff. A recent headline of The Washington Post, “CBO warns of significant recession if Congress doesn’t act to avoid fiscal cliff,” should be a wakeup call if the tax cuts aren’t extended. Pretty frightening indeed, and even worse, it’s reality. Citing the nonpartisan Congressional Budget Office (CBO), the Post explains, “The nation would be plunged into a significant recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January.”
While the Taxpayers Protection Alliance (TPA) may disagree about the negative effects of the spending cuts, the CBO’s report confirmed exactly what TPA has stated all along about the consequences of the impending tax increases on January 1, 2013. The article continued, “… the fiscal cliff or Taxmageddon — would disrupt recent economic progress, push the unemployment rate back up to 9.1 percent by the end of 2013 and produce economic conditions ‘that will probably be considered a recession.’” Given this dire situation, Congress needs to act immediately to mitigate and curb any further damages that the impending Taxmaggedon has and will continue to cause. Congress should make the 2001 and 2003 tax cuts permanent.
As elected officials, it is not only the responsibility of members Congress to protect and ensure the general welfare their constituents, it’s also their duty. Likewise, these members must do all they can to create an environment in which our nation’s economy and its people can flourish. With the uncertainty that comes from the extreme, potential tax hikes that are lurking in the not too distant future – and very well could welcome us into 2013 – it’s no wonder that businesses are wary about investing. Businesses are not the only ones concerned, taxpayers would also rather hold on to their money than act irresponsibly by taking out loans for big purchases.
Not only must Congress make permanent the ’01 and ’03 tax cuts, it should not stop there. Our tax code needs a serious revamping. Businesses and individuals alike are desperate for certainty – not only pertaining to levels of taxation – to be introduced to our economy. For this reason and others, Congress must seize the opportunity to fundamentally alter and overhaul our nation’s tax structure. The current one possesses too many flaws to count ranging from loopholes, preferential treatment and to state the obvious, rates that are just too high.
The best way to address the situation is to completely throw out this onerous, beyond salvageable system and replace it with a far simpler, commonsense one. This solution would serve our nation and its taxpayers well by offering many components lacking in our current system. For starters, it would infuse certainty and confidence; attributes essential to get our economy back on track.
Our nation is at a fiscal crossroads and an abrupt turn must be taken. In his second inaugural address, former President Ronald Reagan challenged the American people to act: “We have come to a turning point, a moment for hard decisions… If not us, who? And if not now, when?” Congress should rise to the occasion and act responsibly for not only the sake of our current generation, but for all those that will follow.