April '09 Nevada Government—John Ensign Column

Paying For A Budget On The Backs Of Charities

Senator John Ensign voted for a measure that would have urged Congress to include the full tax deduction for charitable giving. President Obama’s budget severely weakens a tax incentive designed to encourage donations to charities, a move Democrats, Republicans and charities have criticized. Unfortunately, Democrats defeated the plan and supported Obama’s limitation on the deduction.

“In these tough economic times, many Americans are turning to charities for a helping hand,” said Ensign. “With so many Nevada families dependent on charitable giving just to get by, it seems irresponsible for the President to weaken this tax incentive. Few things are more American than neighbor helping neighbor. We should encourage compassionate giving during this recession, rather than discourage the American spirit that makes our country great.”

The measure Ensign voted for was introduced by Senator John Thune and calls for the preservation of the deduction for charitable contributions. It expresses the “Sense of the Senate” that the full tax deduction for charitable giving should be preserved and that Congress should look for additional ways to encourage charitable giving rather than discouraging it.

Ensign has been a vocal opponent to this plan and is working with his colleagues to ensure it is not included in the final budget.

Charities across Nevada have expressed serious concern about Obama’s provision, saying it will discourage giving at a time when we need it most. Ensign has been leading efforts to garner support for the charitable tax deduction in Congress.

Ensign Aims To Prevent Tax Hike On Low And Middle Class Families

Senator John Ensign, Chairman of the Republican Policy Committee, offered an amendment to the budget that would prevent any tax increase on low- and middle-income families. Ensign’s amendment is consistent with President Barack Obama’s pledge that he would not raise taxes on families earning under $250,000.

“Now is not the time to raise taxes on families who are struggling to pay their mortgages, put food on their tables and stay in their homes,” said Ensign. “As a result of the policies in this budget, taxes will go up on the people who can least afford it. That’s why my amendment is so important, and especially so during these difficult economic times.”

In his State of the Union address President Obama said, “But let me be perfectly clear . . . if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.” However, his budget plan would enact the largest tax increases in American history – a whopping $1.5 trillion.

“Americans deserve to know the true cost of this budget because they have to foot the bill,” said Ensign.

The Democrats’ budget includes tax hikes that would hurt small businesses and charities and a new national energy tax that would result in a more than $3,100 tax hike on families.

Background Information About Senator Ensign’s Amendment

Senator Ensign has offered a first-degree amendment that creates a 60 vote point of order on any legislation that raises taxes (directly or indirectly) on families making less than $250,000.

The text of the amendment is available at http://ats.senate.gov/Data/909/9090195155.pdf.

Summary

President Obama promised that he would not raise taxes “one single dime” on American families making less than $250k
S. Con. Res. 13 partially delivers on this promise by assuming the extension of many expiring elements of existing law, including lower tax rates on individuals making below $200k and couples making below $250k
S. Con. Res. 13 also opens the door for a cap-and-trade program, which would effectively be a tax on all energy consumed and one that would be paid ultimately by American consumers
Ensign #804 would create a sixty-vote point of order on any legislation that increases revenues over the amount set forward in S. Con. Res. 13 in a way that would broadly fall on middle-income taxpayers
The effect of Ensign #804 would be to prevent a carbon tax program, including cap-and-trade, from raising revenues from middle-income families, enforcing the President’s pledge on the Senate floor
Ensign #804 includes taxes collected “directly or indirectly,” including consumption taxes such as a carbon tax

Considerations

In keeping with the President’s pledge during the presidential campaign, the budget ostensibly does not increase income taxes on households earning below $250,000 or individuals earning below $200,000

· However, the budget leaves the door open for a cap-and-trade program, a form of a carbon tax that would fall on all Americans

· Although OMB has estimated that cap-and-trade would raise an average of $80 billion a year in revenue, according to several news stories, a top White House economic advisor admitted (here and here) that the President’s national energy tax would actually raise between $160 billion and $240 billion per year in revenue via the auctioning of carbon permits

Ultimately the costs of the emission permits will result in sharply higher energy prices, an outcome that the president has said is the intentional goal of such a program: “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” (video here)

· According to CBO, because lower income Americans consume more of their income in electricity, the distribution of these costs is steeply regressive, and lower-income houses would bear a larger burden relative to their income than higher income taxpayers

· CBO has also pointed out that these climate taxes will be passed on to consumers, creating an indirect tax that will be a burden on America’s economy

· Collecting climate revenues through higher rates on consumers with income below $200k/$250k would break the President’s explicit pledge not to raise revenue “one single dime” from this class of taxpayers:

1. “But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.”