Semator Doug Whitsett, R-Klamath Falls, District 28,
HERE for KBC Senator Whitsett Page
2012 Tax Initiative Petitions
Under current law, American families and businesses are
facing nearly half a trillion dollars in increased federal taxes
next year. If Congress and the President fail to take action,
this unprecedented expansion in federal taxes will equal nearly
$1,600 for every man, woman and child in the United States.
The specter of these enormous additional tax burdens is already
causing a significant negative impact on our economy. Investors,
businesses and families alike are delaying investments and
foregoing purchases until they know what to expect in the
federal tax arena. The economic stagnation caused by
government-created uncertainty is slowing private sector job
creation and preventing millions of unemployed Americans from
going back to work.
The combined expiration of the Bush-era tax cuts, the ending of
employer payroll tax reductions and enormous new taxes imbedded
in President Obama’s Affordable Care Act will cost American
taxpayers at least $494 billion next year. The preponderance of
these tax increases will be levied on America’s middle class,
working families and the owners of the small businesses that
create nearly three out of every four new jobs.
About a third of the tax increases result from the expiration of
the Bush-era reductions in marginal tax rates. On January 1st
most federal income tax brackets will increase by about three
percent resulting in $56 billion in additional tax liability.
The current ten-percent bracket for the lowest income earners
will be eliminated. Those taxpayers currently subject to the ten
percent bracket will apparently revert back to the twenty-eight
percent bracket creating an additional $37 billion in federal
Federal capital gains taxes will increase from 15 percent to 20
percent and the tax rate on earnings from dividends will
increase from 15 percent to 39.6 percent adding another $29
billion in federal tax liabilities. Moreover, the marriage
penalty will be reinstated costing taxpayers another $17 billion
and the Child Tax Credit will be reduced from $1,000 to $500 per
child costing taxpayers an additional $6 billion. Tax breaks for
the costs of education, dependent care, adoption, and
employer-provided child care will also be lost.
The existing changes in the federal death-tax policy will expire
December 31st.This will cause the tax-rate to
increase from 35 percent to 55 percent and the amount exempted
from taxation to fall from $5 million to $3.5 million. For
example, the federal death tax on a $5 million estate would
increase from zero to $825,000.
The expiration of the Bush-era changes to the Alternative
Minimum Tax will account for about one-fourth of the massive tax
increase. This tax was originally levied to stop high income
earners from using deductions and tax credits to prevent having
to pay any income tax. Inflationary increases over several
decades resulted in middle class income earners being
unintentionally subjected to the tax.
To alleviate that problem Congress enacted a temporary change to
adjust the income trigger. The Heritage Foundation estimates
that the expiration of that temporary adjustment will result in
middle class families and employers having to pay nearly $120
billion in additional Alternative Minimum Tax.
Congress temporarily reduced the employee’s portion of the
Social Security payroll tax by two percent as part of the effort
to stimulate the economy. Expiration of that reduction will
reduce employees’ paychecks about $125 billion in 2013.
Most of the remainder of the tax increase is the result of the
myriad new taxes imbedded in the Affordable Care Act.
So, how will this enormous federal tax increase affect Oregon’s
According to the Cascade Policy Institute, Oregonians will pay
about $5.8 billion in additional federal taxes next year if
Congress fails to address the current tax laws. The increase is
comprised of about $2 billion in federal income taxes, $1.5
billion in restored payroll tax contributions, and $2.3 billion
in new taxes imbedded in Obama’s Affordable Care Act. This
amount is equivalent to nearly 80 percent of Oregon’s entire
biennial General Fund /Lottery budget!
The Cascade Policy Institute recently reported that Oregon has
had no real increase in private employment over the past decade.
The Oregon Department of Employment reports that only a little
more than 60 percent of our State’s employable workforce
currently has a job. In my opinion, excessive taxation and
regulation, both at the state and federal levels, are the
primary reasons for that dismal employment record.
We can only imagine the harm that enacting an 80% increase in
Oregon taxes would do to our State’s already tenuous financial
and employment situations. This enormous impending federal drain
on Oregon’s economy is even worse than an Oregon tax because the
preponderance of the federal tax money to be collected will not
be spent in Oregon.
In my opinion, our nation is in eminent financial crisis.
Congress must find the will and the means to reduce the size and
the cost of government and to re-establish the free market
system that has built and nurtured our economy for more than two
centuries. A good place to start would be to roll back the
impending half trillion dollar tax increase and instead focus on
Please remember, if we do not stand up for rural Oregon, no one
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