Mr. President, I rise today to introduce The Working Family Tax Relief Act of 2004. I would like to thank my colleague, Senator Miller, for his support of this important legislation. His leadership has laid the foundation of bipartisan…
Mr. President, I rise today to introduce The Working Family Tax Relief Act of 2004. I would like to thank my colleague, Senator Miller, for his support of this important legislation. His leadership has laid the foundation of bipartisan support that this critical tax bill and working American families deserve.
Tax relief has contributed to economic growth throughout our economy. We have successfully encouraged companies to create more jobs and Americans to save and spend more. The President's tax cuts and our votes here in the Senate helped to revive an economy that was sagging in 2000 and shocked by the tragedies of September 11, 2001.
We put a plan in place in 2001 to help the American family to keep more of the money they work so hard to earn. In 2003, Congress saw fit to accelerate the effective date of some of this family tax relief in order to give these families this help as quickly as possible. As a result, every American family who paid any income taxes during 2003 saw a reduction in their taxes and they will enjoy those lower taxes for this year as well. However, if we do not act this year, America's working families will face a tax increase next year. We cannot allow this to happen.
The lowest-income Americans have benefited dramatically from the new 10 percent tax bracket. Today, thanks to this new bracket, working Americans are keeping more of their hard-earned paychecks. But if we do nothing, taxpayers with as little as $7,000 in taxable income could face a tax increase next year. My legislation proposes to keep the current 10 percent tax rate bracket in place rather than allowing it to shrink and increase taxes on the working families of America. This extension could bring relief to as many as 1.2 million people in Kentucky and millions of others throughout the country.
And, if we do nothing, the child tax credit will be cut by 30 percent in 2005. We need to keep the $1,000 tax credit and not let it revert to the old $700 credit. There are over 350,000 taxpayers in Kentucky who need this tax relief and will benefit from this legislation. We can't ask millions of Americans to pay an extra $300 per child next year. Will you ask the families of this country, who have worked so hard to raise our entire economy up, to pay more in taxes simply because they have children? I know I won't, and I hope my colleagues won't either.
The accelerated marriage penalty relief will also lapse after this year unless the Senate acts. I propose keeping the current tax deduction in place, which we increased to twice that of an individual taxpayer in 2003. Without this extension, married couples will see a cut in their standardized deduction--actually penalizing couples for being married. Over 465,000 Kentuckians benefits from this legislation. We need to keep this important tax relief intact.
And finally we need to address an unintended consequence of the Alternative Minimum Tax. When the Senate passed the AMT, it was designed to ensure wealthier Americans paid at least some percentage of their income in taxes. Now that same AMT is hurting working families and middle-income America. In 2003, the Senate passed limited AMT relief that is now set to expire. This legislation will keep the current exemption levels of $40,250 for single and $58,000 for married taxpayers in place for 2005. If we fail to act, an additional $7,000 to $13,000 of middle-income taxpayers' income will be subject to this tax. We all know that the AMT is a serious issue and one that we must address--the limited relief contained in this bill is not a final solution to this large problem, but it will keep the problem from getting even worse.
There are other important tax cuts that should be extended and there are other problems with the tax code that I would like to correct. But the four provisions addressed in this bill have to be addressed today not just to provide tax relief, but to prevent an immediate tax increase. We owe it to the working families and low-income Americans who rely on these tax cuts to act quickly and extend these four provisions--the 10 percent tax bracket, child tax credit, marriage penalty relief and AMT relief. Working American families and lower to middle-income America were hit hard with the economic downturn--that is why we passed these tax cuts in the first place. And now, just as these industrious Americans have started to find new jobs and spend a little more money to grow the economy, we cannot hold them back with a tax increase.
And I can't stress this point enough. Many Americans--especially low and middle income families--will have their tax rates increased and face cuts in their deductions and credits unless we act. My bill is about extending the important tax breaks that we all agreed to in 2001 and accelerated in 2003. We made a commitment to the American family in the midst of an economic downturn--offering them tax relief to help stimulate the economy. And now that these tax cuts are starting to work, we can't afford to take them back. We must stay the course and support our Nation's families as we move the American economy forward toward renewed prosperity.
I know how tight government finances are likely to be this year. And as my colleagues know, I have always taken a hard look at spending proposals. But we built about $80 billion into the Senate-passed FY 2005 Budget proposal for these tax provisions. And there are similar provisions in the House-approved budget. I am confident that we can secure the amount we will need for this proposal over the next few years.
We find ourselves in a unique position--we must be proactive to protect the American family from an unjust tax increase. We need to take a stand for low and middle income America. This Bunning-Miller tax relief legislation will protect working Americans from what would be a devastating tax increase in 2005. I urge my colleagues to get behind this bipartisan legislation and support the Working Family Tax Relief Act of 2004.