by U.S. Senator Jon Kyl

On January 1, Americans may be celebrating more than the New Year. Thats because, at the stroke of midnight on December 31, we could be ringing in the biggest tax hike in the history of our country.

Unless Congress acts before years end, current tax rates are scheduled to go up for every American. The tax rates for the lowest-income Americans will go up by 50 percent. The tax credit families receive for children will be slashed in half. Tax rates will skyrocket for seniors who rely on income from their investments. Married couples will have their income tax rates increase simply because theyre married. The death tax returns at full force, with the government confiscating up to 55 percent of someones assets after he or she dies. A family of four earning just $40,000 a year would owe roughly $2,500 more in taxes.

All of this is the result of the Byzantine budget rules under which Congress operates, where spending programs are eternal, but tax relief is considered temporary. When rates were first reduced in 2001 and 2003, many congressional Democrats demanded the tax relief be temporary. Ten years later, while the nation is in the middle of a sluggish economy and unemployment is hovering at historical highs, Americans face a $2.7 trillion tax hike at the end of this year.

By extending current tax rates, Congress could go a long way toward accomplishing what the administration has been trying to do for almost two years: create jobs. So far, the Obama administration has tried to create jobs by spending money on initiatives packaged as economic stimulus. But that approach has not worked. Three million more people are out of work today than when the stimulus package passed. In fact, the administration claimed his stimulus bill would keep the unemployment rate from exceeding about 8 percent, and, of course, it now stands at 9.5 percent.

The other way to create jobs is through investment by businesses, both large and small. When businesses have capital to invest, they can hire more people, create more goods and services, and therefore produce both growth and jobs.

Indeed, a recent study by Dr. Christina Romer, outgoing chair of President Obamas Council of Economic Advisors, concluded that a tax increase of one percent of GDP reduces output over the next three years by nearly three percent. Thus, when taxes rise, our economy produces lessand that clearly isnt a way of getting Americans back to work.

Small businesses, which are the engines of job growth in our economy, have generated roughly 64 percent of net new jobs in the past 15 years, and employ just over half of all private sector workers in the United States. Unless Congress extends the tax rates, small businesses would be hit the hardest.

The nonpartisan Joint Committee on Taxation recently released a study that found that half of all business income reported on individual tax returns falls in the top two tax brackets. And according to Douglas Holtz-Eakin, the former director of the nonpartisan Congressional Budget Office, an increase in the top effective rate from 35 percent to 42 percent would lower the probability that a small business entrepreneur would add to payrolls by roughly 18 percent. So, obviously, raising taxes on these successful small businesses that earn enough to actually hire employees will hurt job creation.

Congress has been on a spending spree and is now trying to leverage the huge debt it has run up as an excuse to raise taxes, and thus perpetuate a larger and larger government. But Americans know that our debt problems are the result of too much spending, not too few taxes.

President Obama has proposed spending $5.6 trillion dollars on government programs over the next 10 years. The stimulus bill spends 1.2 trillion taxpayer dollars, but the only thing it has stimulated is the nations deficit. And he crammed through a government takeover of health care that will cost taxpayers $2.6 trillion over the next 10 years. We cant let the debt crisis the President created provide an excuse to raise taxes that will kill economic recovery and erode our standard of living.

President Kennedy once said, An economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs.

This administration would do well to heed President Kennedys insight.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his website at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.   back...