December 19, 2012

Dear Lewis:

Thank you for contacting me regarding efforts to extend existing tax rates for individuals under a certain income level while allowing rates to go up on January 1, 2012, as currently scheduled for those who make more than a certain level. I appreciate hearing from you and having the opportunity to respond.

 

As Congress debates proposals to address the budget crisis, conversation about fundamentally reforming our tax code is a key factor in the discussions. Underlying this debate is the fact that lower tax rates for all taxpayers, which were enacted in 2001 and 2003 under the Bush Administration and extended under the Obama Administration, are scheduled to expire at the end of 2012. President Obama has recently proposed extending the current lower tax rates for families making under $250,000 per year while allowing it to increase to previous levels for families making over $250,000.

First, let me make it clear that I support the current lower tax rates on American families, and I believe that allowing taxes to go up in January would have a damaging effect on our fragile economy and would cause hardships for families and small businesses. To that end, I have supported efforts to extend the current tax rates for an additional year.

That being said, as the debate over how to avoid the looming fiscal cliff heats up, I am concerned that the loudest arguments are about this issue of whether to let tax rates go up at the beginning of next year while discussions about long term changes to the way government operates are neglected.  I have never believed that raising taxes is a legitimate solution to the budget crisis we are in.  What I do believe is that if we really want to address the budget crisis, neither the proposal by President Obama nor the one by congressional Republicans, which is not large enough to make a real impact on the national debt over the long term, will get us there.  We have to go bigger than that, reducing the deficit by at least twice as much as either of these proposals suggests.

For over a year I’ve been saying that the only way to get there is to put all options on the table, including entitlement reform, discretionary spending, and revenues.  And while I have supported extending the current tax rates for an additional year, the reality is that right now under current law tax rates are going up at the end of this year.  Within the context of this reality, I believe it is imperative to recognize that allowing the current tax rates to expire at the end of the year on certain individuals, like the President is advocating, still won’t address our budget crisis unless we also make meaningful reforms to our entitlement programs to make them solvent for the future.

Frankly, I think this conversation about raising taxes on the wealthiest Americans is distracting us from the real issue.  The real issue is that our national debt is rapidly reaching a breaking point, and we can no longer kick the can down the road and avoid making the difficult decisions necessary to balance the budget and reduce unsustainable government growth.  Letting tax rates go up—even on the wealthiest 2% of Americans—doesn’t fix this problem.  What must happen is that Congress must set aside partisan politics and get serious about finding $4-6 trillion in savings—something that will require us to put everything on the table.

At the end of the day, if we truly want to get our deficit under control, we must fundamentally reform our tax code. Temporarily extending tax rates without making the reforms necessary only puts Band-Aids on a system badly in need of overhaul. What I support is fundamental tax reform that lowers the tax rate and broadens the base, creating a simpler and fairer tax code. I believe this type of system would create the economic growth necessary to address our deficit crisis.  The tax code should be a simple system intended to raise the necessary revenue for appropriate government functions, not a complex system through which the government directs social behavior.

Once again, thank you for taking the time to contact me with your concerns. As your representative in the United States Congress, your thoughts and opinions are very important to me. I also encourage you to visit my website atwww.simpson.house.gov to sign up for my e-newsletter and to read more about my views on a variety of issues.

Sincerely,

Mike Simpson

Member of Congress