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<p><b>The Senate Attempts to Raise Taxes</b></p>
<p>Here we go again! Senator Joe Biden (D- Del.) is leading the charge to overturn the Bush tax cuts President's Jobs and Growth Act and raise taxes. Senator Biden wants to reverse the income tax rate reductions for individuals in the highest tax bracket. This week, he is planning to offer an amendment to repeal the income tax rate reduction for the top 1 percent of income earners, and use that revenue to offset the cost the operations in Iraq. According to the Department of Treasury, the Biden amendment would raise taxes by $87 billion. </p>
<p>Sen. Biden’s reasoning? The usual "class warfare" arguments that the wealthiest Americans should shoulder a more "fair" portion of the tax burden. That’s despite the fact that, according to the Tax Foundation, the top one percent of income earners in America today make 20.8 percent of the income, but pay 37.4 percent of the taxes. Going further, the top quarter of income earners make 67.2 percent of the income, but pay 84 percent of the taxes. We’re already socking it to America’s entrepreneurs and risk-takers.</p>
<p>What Senator Biden and his pals also fail to realize is that the top income tax rate taxes business, not just the wealthy. Raising the top income tax rate would hurt the hundreds of thousands of Subchapter S businesses and partnerships that file income taxes as individuals. These small businesses are the job creation engine in our economy. In fact, according to the Small Business Administration's most recent data, small businesses created three quarters of the U.S. net new jobs. Reducing their available capital means fewer jobs can be created. </p>
<p>Senator Biden’s timing could not be worse, since America is already beginning to see positive growth from the tax cuts passed in May of this year. Indeed, the tax cuts in Jobs and Growth Act were embraced by the Senate to stimulate the economy. To reverse them now would stagger our economic recovery. Sen. Biden should offer an amendment to cut wasteful spending instead of raising taxes.</p>
<p>Senator Biden may be acting as the stalking horse in a broader Democrat strategy on taxes. His amendment is straight from the campaign manuals of a number of Democrat Presidential candidates. We expect to see this line of attack over the next fourteen months, as the Presidential campaign heats up. We’re ready to have this debate—and explain to the Senate why a lower, flatter tax codes benefits all Americans by creating jobs and economic opportunity. </p>
<p><b>Alabama Passes Budget with No Tax Increases</b></p>
<p>On Sept. 9, 2003, Alabama voters overwhelmingly turned back an attempt to raise state taxes by a statewide vote of 68-32 percent. Since then, the spotlight turned on state legislators, who would have to close the state’s budget deficit with spending reductions. This week, they did just that, by cutting spending and avoiding a tax increase! On Monday, Alabama Gov. Bob Riley signed trimmed General Fund and state Education budgets that spend $1.2 billion and $4.2 billion, respectively. </p>
<p>The Governor’s Press Secretary, David Azbell, told media that, "Considering the finite amount of resources the state has, these budgets were the best we could ask for. The budgets are not punitive on anyone." </p>
<p>During the tax referendum debate this summer, supporters of the tax increase made increasingly hysterical claims about the doom that would come if taxes weren’t increased. However, Azbell’s statement simply confirms that the tax increase resoundingly defeated by voters on Sept. 9 was not truly needed. The claims about prisoner releases and school closings if the tax increase failed were, in fact, dead wrong. </p>
<p>Alabama’s new fiscal year for 2004 begins October 1st, and legislators will begin work on fiscal 2005 budgets next February. </p>
<p>CSE Co-Chairman Dick Armey, who traveled to Alabama to rally voters against the tax increase, said this week, “It’s great to see Alabama pass a budget that does not raise taxes. On Sept. 9, Alabama voters spoke loud and clear, and for once, Montgomery appears to have received the message: cut spending, and do not raise taxes. But the fight isn’t over. Alabama CSE will continue to work to bring real reform and accountability to Alabama’s education system and overall budget process.”</p>
<p><b>School Choice: Still Delayed in the Senate</b></p>
<p>The Senate debate this week has been dominated by accusations revolving around the Novak column on Weapons of Mass Destruction. That’s too bad, because the Senate is still sitting on an astonishing backlog of important legislation, and they really need to get to work.
One important measure that the Senate is stalling on is School Choice for the District of Columbia. Senate Democrats are beginning to filibuster the District of Columbia fiscal 2004 appropriations bill (HR 2765), which includes the school voucher plan. School choice supporters—most of whom are Republicans—currently lack the sixty votes needed to end debate. </p>
<p>Meanwhile, the political heat is starting to rise on some of the Senators who are opposing school vouchers. The <a href="http://www.miami.com/mld/miamiherald/news/politics/6893916.htm">Miami Herald reports</a> that Democratic Sen. Bill Nelson (D-Fla.) is "being targeted on 12 Florida radio stations popular among black listeners as an opponent of school vouchers for minority students…" According to the Miami Herald, the ads say that, "'Bill Nelson knows that wealthy folks can choose to go to any school they want. But too many African-American children are trapped in schools that are not doing the job.'"</p>
<p>As we’ve been saying all along, the fight for D.C. vouchers does matter to the rest of the country, and there will be a political price for officials who oppose the D.C. scholarship program in favor of the failing status quo.</p>
<p><b>Welfare Authorization Extended</b></p>
<p>On Tuesday of this week, the Senate passed an extension of the Temporary Assistance for Needy Families welfare program until March 31, 2004. That’s a six month extension. The House has already passed legislation building on the landmark 1996 welfare reform bill that is focused on the dignity of work instead of dependence on the government.
The Senate is running from having a full debate on the astounding success of the 1996 welfare reform bill, which has cut welfare rolls roughly in half. It’s time to build on this success and strengthen welfare’s work requirements. Let’s hope that postponing the debate until March will improve the environment in the Senate for passing a long-term welfare bill.