Idaho Sen. Mike Crapo is joining with other Senate Republicans in an effort to remove a new tax on investments that was part of health care legislation approved by Congress earlier this year.
“As more and more middle income American families learn about this new tax increase headed their way, it is my hope that my colleagues in the Senate will get the message that this tax increase must be repealed,” Crapo said in a news release.
The law passed in March would tax investment incomes, including interest, capital gains, dividends, and rents, at a 3.8 percent rate, starting in 2013. It wouldn’t apply to families earning less than $250,000 a year or individuals making less than $200,000. That money is expected to bring in $123 billion by 2020, which would go to Medicare and other federal spending programs.
Crapo said part of the problem with the plan is that those income limits aren’t linked to inflation, so as incomes rise over time, more people would have to pay the investment tax.
“If it wasn’t enough of a mistake to enact a new investment tax increase at a time when our struggling economy is in such need of new investments, failing to even index the thresholds for inflation just means that millions of middle income Americans will be facing another new tax increase in just a few years,” he said.
“Simply put, increasing taxes on investment income is a job killer and increases uncertainty,” Sen. John Cornyn, R-Texas, the sponsor of the tax repeal, said on the Senate floor Thursday. Cornyn and Crapo tried to strip out the investment tax when the law passed in March, but failed. Cornyn mentioned that six Senate Democrats supported his plan at that time.
The plan from Crapo and Cornyn now heads to a Senate committee.
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