Senate Tax Bill is “Retreat on Reform”

The tax reconciliation bill currently on the Senate floor is largely devoid of pro-growth tax relief and substantially complicates the tax code. It also contains a windfall tax on oil companies that would raise taxes by $4.9 billion over five years by changing the way inventories are valued for tax purposes.

FreedomWorks President Matt Kibbe commented,

“The special interests have derailed this process and managed to turn $60 billion in so-called tax relief into a bill that does little for the U.S. economy or the average taxpayer. While some of the bill’s myriad extensions and provisions might make sense in isolation, in aggregate the bill is a policy failure. It makes the tax code more complex and offers very little pro-growth tax relief for the nation as a whole. The extension of the AMT reduction, business expensing, and the state sales tax deduction are the only major policy items included from our 2003 pro-growth, pro-fairness tax agenda.”

“While we deeply sympathize with the victims of Katrina, the tax code is not the best policy vehicle to provide reconstruction incentives. The pro-growth tax items targeted for the Gulf region should be extended to all American taxpayers.”

“The best thing that can come from this effort is if the bill is repaired on the Senate floor or in Conference by restoring the extension of the dividend and capital gains tax relief, and by striking the unfair new tax increase on American oil companies. Indeed, all of the 2003 tax cut provisions should be extended and made permanent.”

“The same ‘moderate’ senators who are undermining this bill are some of the biggest spenders in Congress. Good tax policy reduces deficits in the medium term. For example, reducing the double taxation of capital has buoyed the stock market and increased U.S. economic growth. Instead of extending the important tax cuts of 2003, the larger Senate Republican majority in 2005 is somehow poised to pass a bill that retreats on reform and includes a massive new tax increase on U.S. energy companies.”