According to Senator Orrin Hatch, top Republican on the Senate Finance Committee, Americans are in for a brutal tax increase unless legislative action is taken soon. In just over five months, taxes will be raised to an unprecedented degree unless President Obama and Congress can come to an agreement. Although tax agencies may wish to see such a spike, the majority of Americans would probably prefer tax rates to stay where they are.
Hatch has proposed legislation that would allow current tax rates to remain in place for another year. Then, in 2013, he suggests fundamental reform of the tax code, which he calls broken and costly. A reformed tax code, he suggests, would free up substantial resources that are currently being spent on maintaining compliance with tax law. These liberated funds could be applied to education, business development and charity, he suggests.
The senator draws upon data from the Federal Reserve, the International Monetary Fund, the Congressional Budget Office and the accounting firm Ernst & Young, to warn that a major increase now would severely damage the economy. Small businesses would be hit the hardest, and so would job creation. According to Ben Bernanke, Chairman of the Federal Reserve, the combination of tax increases and spending reductions that are slated to go into effect early next year could jeopardize the nation’s economy in a big way.
In addition to the potential damage a tax hike could cause once implemented, the mere prospect of it is already causing problems, according to Hatch. Businesses are uncertain and the economy is moving slowly, for fear of what may come out of the Capitol. In order to stimulate the economy and put American minds at ease, the senator urges, Congress must take action immediately.
Source: cnn.com, “Taxmageddon is headed our way,” Orrin Hatch, July 25, 2012