Get ready for a heated battle in Congress this fall over whether the Bush-era tax cuts should be allowed to expire.
President Barack Obama and many Democrats have said they want to make the cuts permanent for middle- and lower-income taxpayers and allow rates to increase for individuals making more than $200,000 and couples making more than $250,000, according to the Associated Press.
Republicans and some Democrats say they want to make all of the cuts permanent, insisting that the economy will continue to sputter if taxes increase.
The Daily News asked each of the candidates vying for the 3rd Congressional District seat in next month's primary to discuss whether they would allow the cuts to expire.
The tax reductions, approved under President George W. Bush in 2001 and 2003, have been cited — along with the Iraq and Afghanistan wars and the Obama economic stimulus package — as a cause for the nation's budget deficit, which was $1.4 trillion last fiscal year.
If the cuts are allowed to expire, taxes would increase on income, estates, dividends and capital gains. The income tax rate for the highest earners would return to 39.6 percent from its current level, 35 percent, which is the lowest rate since the 1930s. In addition, taxpayers in lower brackets would have corresponding rate increases.
Following are answers, submitted by e-mail, from Republicans Jaime Herrera and David Castillo, Democrats Cheryl Crist and Denny Heck and Independent Norma Jean Stevens. Republican David Hedrick did not participate. Answers have been edited for length.
Would you allow the Bush tax cuts to expire?
Herrera: No. We should make these tax cuts permanent. These tax cuts have meant a savings of about $2,200 a year for a family of four. Southwest Washington families can't afford to send more of their paychecks to the IRS. Small business and entrepreneurs are the ones who can pull us out of this recession, but more than 50 percent of those who will have to pay more if the tax cuts expire are small business owners and investors.
Heck: I would not allow the tax cuts to expire for the middle class and small businesses. In fact the original tax cuts clearly did not go far enough in this regard. Middle-class families and small businesses clearly needed more tax relief back then, and certainly they need relief right now. Too many of the tax cuts went to the very rich in this country, and those cuts should expire.
Castillo: No. According to the Congressional Budget Office, the expiration of the Bush tax cuts will cost the American people $115 billion next year alone. Between 2011-2020, the estimate is $2.6 trillion. That is money no longer in the hands of the American people. In addition, the bottom rate right now is 10 percent. That increases to 15 percent if the Bush tax cuts expire. That is going to be a tax increase on people who can least afford it.
Crist: Yes, for those individuals with adjusted gross income of $250,000 each year, and couples above $500,000 each year. The Bush tax cuts cut taxes for the wealthy while saddling future generations with debt.
Stevens: No. Lower taxes actually brings in more revenue as people will do what they can to avoid paying higher taxes.
Can the U.S. balance its budget and continue to fight the wars in Iraq and Afghanistan without raising taxes?
Herrera: Families and struggling businesses are sending enough money to D.C. We need to continue to defend ourselves, and nobody wants Iraq and Afghanistan to be endless occupations. We have already begun withdrawing forces from Iraq, and I want to see us out of Afghanistan as soon as we can do so while still keeping Americans safe.
Heck: The Wars in Iraq and Afghanistan are being paid for with borrowed money, and are costing us billions in addition to the lives of our finest men and women. We cannot continue paying for them this way indefinitely.
Castillo: I believe that out of control government spending (that began in earnest in late-2004 early 2005) bears the lion's share of responsibility for our current deficits. We have a Congress unwilling to prioritize and that must change. That is one of the reasons I support a Balanced Budget Amendment to the U.S. Constitution. According to the Washington Post, the "stimulus plan" passed by Congress cost U.S. taxpayers more than the combined costs of the wars in Iraq and Afghanistan. Ultimately, we are not suffering from a lack of revenue to the treasury, we are suffering from a lack of fiscal discipline. I do believe we can continue in Iraq and Afghanistan without raising taxes.
Crist: No, which is why I support bringing our troops home so we can spend those resources on things people need here at home. The $159 billion we're spending on war each year could be better spent on social services, job creation, and paying down the debt.
Stevens: The top wage earners are the very ones who are the small business owners who create the jobs. By keeping the tax cuts the small businesses don't have to worry about paying more taxes and they can invest in company growth and create more jobs, which in turn will help the economy.
How would you balance the budget without raising taxes?
Herrera: A few examples of what we could cut: $270 billion in unspent stimulus funds; a 10 percent budget cut across the board for executive staff in Congress, in the White House and in federal agencies. We should also cut back on travel and expenses.
Heck: Congress must take more seriously the threat to job creation and long term economic recovery represented by these unsustainable deficits. It is Congress's job to demonstrate leadership by approving a line item veto for the President to stop pork spending, enacting ‘pay-go' into law, and take a 10% pay cut until the budget is balanced. We need to address the rapidly accelerating health care costs in this country if we have any hope of bringing our fiscal house in order.
Castillo: I am unwilling to start from the premise that the Bush tax cuts are the major driver of our current deficit. According to Congressional Budget Office, the Bush tax cuts are responsible for 14 percent of the swing from projected surpluses to deficits. To balance the budget I would eliminate the Department of Commerce, Department of Energy, and Department of Education. I would also roll back non-veterans discretionary spending to pre-2004 levels; freeze spending at the 2004 level wherein spending cannot increase beyond inflation plus population growth unless there is a national emergency; force agencies and commissions to adopt "zero based budgeting;" and establish a commission to look at eliminating government agencies/programs where there is overlap.
Crist: We need to preserve lower tax rates on middle-class families, while letting tax breaks for the wealthiest Americans expire, so we can create clean, safe jobs, provide vital social services, and pay down the debt.
Stevens did not answer the question.