Jan 03 2014

Kansans Celebrate One Year of Permanent Tax Relief for Their Families;

$4 trillion in taxes averted with Roberts’ support

Senator Pat Roberts’ vote -- just one year ago -- to make Bush-era tax relief provisions permanent has allowed the average Kansan family to keep more than $2,300 in their pocketbooks in 2013, according to The Tax Foundation (Kansas, $2,350, Average Tax Savings from One Year Extension of Bush Tax Cuts, Tax Year 2013. The Fiscal Cliff: A Primer. Tax Foundation Staff, November 13, 2012, No. 204, p.4).

Just a year ago: Kansas families saw their tax bills rise at the stroke of midnight on January 1, 2013, when critical relief like the marriage tax penalty, the child care tax credit and the estate tax relief expired, just as President Obama pushed Congress for higher taxes.

Congress had to act quickly overnight to make sure that Americans could keep their tax relief provisions. Better yet, Republicans successfully fought to make much of the relief permanent. Predictions for a wild stock market ride when the markets re-opened on January 2, 2013 also hung in the balance.

Roberts’ vote for the American Taxpayer Relief Act of 2012 (ATRA) saved 98 percent of taxpayers from a massive tax hike. (“98 percent of taxpayers…” “7 Things You Need to Know About the Tax Deal,” White House Press Release, January 2, 2013; “Toppling Off the Fiscal Cliff: Whose Taxes Rise and How Much?” Tax Policy Center, October 1, 2012).

Roberts consistently fights against tax increases because he strongly believes that higher income taxes depress the economy, take money out of the pockets of working families who are trying to make ends meet, and create a disincentive for small businesses, the leading job creators, to expand and create jobs and help grow our economy.

(The taxpayer relief act should not be confused with President Obama’s payroll tax “holiday,” which he championed as a “temporary measure” in a tough economy. Those provisions were allowed to expire, an action that had support from many conservative legislators and groups. Then-Senator Jim DeMint opposed two payroll tax holiday extensions. Grover Norquist, president of the conservative Americans for Tax Reform, agreed it was a temporary measure and did not consider allowing the payroll tax cut to expire to be in violation of the group’s pledge against raising taxes. (National Journal, 2011).

The big plus for Kansas families: Roberts’ vote on the tax relief legislation actually saved taxpayers $4 trillion. (“$4 trillion” estimate is rounded up from 10-year revenue loss from “General Extension” of the American Taxpayer Relief Act of 2012 ($3.851596 Trillion), “Estimated Revenue Effects of the Revenue Provisions Contained in an Amendment in the Nature of a Substitute to H.R. 8, the ‘American Taxpayer Relief Act of 2012,’ AS PASSED BY THE SENATE ON JANUARY 1, 2013,” Joint Committee on Taxation, JCX-1-13, p. 3).

The provisions included in the American Taxpayer Relief Act are pro-family, pro-growth tax policy. Roberts voted in favor of these tax relief measures when they initially were passed by Congress because Kansas families and small businesses deserve to keep more of their hard-earned dollars. This tax relief has resulted in lower individual income tax rates, provided marriage penalty relief, doubled the child tax credit, provided estate tax relief, lowered capital gains and dividend rates, and provided relief for middle-class families from the burdensome Alternative Minimum Tax (AMT).

Here’s what Pat Roberts’ vote means to Kansas families:

  • Income Tax Brackets – ATRA made permanent the lower tax rates for all but the highest income taxpayers. This includes the two-thirds of all businesses that are individually owned.
     
  • Child Care Tax Credit – ATRA permanently extended the child care tax credit, which allows certain taxpayers to reduce their federal income tax for each child under age 17.

  • Marriage Penalty Relief – ATRA permanently protects two-earner couples from the marriage penalty by expanding the standard deduction for joint filers and by expanding the lower tax brackets for married couples.

  • Earned Income Tax Credit – ATRA extended for 5 years special tax credits for lower-income working families, increasing the amount of the credit and raising the income limits for claiming the credit.

  • Dependent Care Credit – ATRA permanently extended and increased a tax benefit for families caring for children under age 13 and disabled dependents regardless of age.
     
  • Education Benefits – ATRA permanently extended tax provisions designed to make it easier for individuals and families to afford the costs of education, including rising college tuition rates.

  • Adoption Tax Credit – Under ATRA, the tax benefits, for adoption, including the adoption tax credit, were made permanent.

  • Credit for Employer -Provided Child Care Assistance – ATRA makes permanent the business tax credit for acquiring, constructing, rehabilitating or expanding child care facilities.

  • Estate Tax – ATRA avoided a significant increase in the estate tax burden, which is particularly important to ranchers and farmers. Under the Act, farms and ranches worth $5 million or lower will not be subject to the estate tax. Estates above $5 million will be taxes at 40%.

  • Investment Income – ATRA kept in place for all but the wealthiest taxpayers special tax rates on investment income and dividends.

  • Alternative Minimum Tax Credit – ATRA made permanent relief from the alternative minimum tax for most taxpayers, including raising the exemption amounts from the AMT. This provision alone totaled more than the payroll tax break that lapsed in the 2012.

  • Mortgage Debt Relief – ATRA extended a provision that permits taxpayers who have mortgage debt cancelled or forgiven to exclude up to $2 million in forgiven debt. This provision is designed to prevent taxpayers from being taxed on phantom income, to which they have no access.