proposed tax increase, there’s evidence that raising taxes in a struggling economy makes things worse. Federal Reserve Chairman Ben Bernanke said this in response to a question I asked him during Senate Budget Committee hearing earlier this year.
Q: Aren’t taxes on working families going up anyway in January 2013?
A: Personal income taxes for individuals and families will go up dramatically if Congress and the President don’t act this year to extend the tax relief enacted in 2001 and 2003. I authored these tax relief measures as Chairman and Ranking Member of the Senate Finance Committee. The legislation reduced marginal tax rates and even created the 10-percent bracket for low-income taxpayers. It also reduced the marriage penalty, increased the child tax credit, increased the adoption credit, and increased tax relief for both education and dependent care costs. Most small business income is taxed at the top marginal rate for individual taxpayers. So, small businesses, where 70 percent of new jobs are created, will see tax increases if this tax relief is not extended, and job creation will be made more difficult. Without action by Congress and support from the President, low-income taxpayers will see their rate jump from 10 to 15 percent. Because of the procedure under which the legislation was passed, the tax relief expired after ten years. Congress and the President extended it with a bipartisan agreement in 2010. These tax policies should be permanent law, but at the very least, they should be extended.
The problem isn’t that people are taxed too little, but that Washington spends too much. Consider that from 1946 to 2008, budget deficits averaged 1.7 percent of the gross domestic product and exceeded five percent only three times. From 2009 to 2011, budget deficits averaged 9.4 percent of the gross domestic product. And, the federal debt held by the public grew from 40 percent of the gross domestic product in 2008 to an estimated 69 percent of the gross domestic product in 2011.
Q: When is the deadline to file and pay my income taxes?
A: The annual federal income tax deadline is usually April 15. This year, because April 15 falls on a Sunday, and April 16 is a holiday in the District of Columbia, the federal tax deadline is Tuesday, April 17, 2012.
Q: Where can I get help with filing?
A: The Internal Revenue Service provides additional guidance for taxpayers, including information about filing electronically for free, at www.irs.gov.