Bush Threatens to Veto Democratic Tax Legislation

from www.tax-net.com
Bush Threatens To Veto Democrat Tax Legislation, by Mike Godfrey, Tax-News.com, Washington 10 August 2007
US President George W. Bush has once again warned Congress that he is prepared to veto any fiscal legislation that would increase taxes or spending, and has hinted that he may send to Congress plans to cut the US corporate tax rate, now one of the highest among the major trading nations.
In a press conference following a meeting with his economic advisors earlier this week, Bush said that tax and spending legislation proposed by the Democrats, who control Congress, threatens to undermine US economic growth brought about by the tax cuts for individuals and investors passed during his presidency.
"My administration follows a simple philosophy: Our economy prospers when we trust the American people with their own paychecks. When I came to office in 2001, our nation was headed toward a recession. And so we acted. We acted on the philosophy I just described, and we cut the taxes across-the-board. And the American people have used this money to fuel an economic resurgence," Bush stated.
"Tax cuts let Americans keep their own money. It stimulates entrepreneurship. And we have a debate here in Washington over tax cuts. Democrats in Congress want to increase taxes and turn them into additional government programs, and I strongly oppose that approach."
Bush said that tax revenues are expected to increase by $167 billion this year compared to last year, because tax cuts have helped fuel growth in the US economy. This, he said, would help bring the budget into surplus on schedule in 2012.
According to Bush the Democrats, by contrast, have proposed a tax and spend budget which would add an extra $205 billion in discretionary spending over the next five years. "Somebody is going to have to pay for it," he argued. "If the majority in Congress gets its way, American families, small businesses will face a massive tax hike. It would amount to the largest tax increase in American history."
"I recognize the Democrats control the Congress, and with it, the power of the purse. I also have some power, and it's called the veto. And I have the votes in Congress to sustain vetoes, and therefore, I will use the veto to keep your taxes low and to keep federal spending under control."
With tax reform, particularly in the area of business taxation, having climbed up the Bush administration's policy agenda once again, Bush also hinted that he is preparing new proposals that would allow a cut in the rate of US corporate tax by repealing narrowly targeted tax breaks.
In an interview with a group of journalists after his meeting with economists, Bush stated, according to the Washington Post, that he is "inclined" to send a corporate tax package to Congress, but he conceded that these plans had a slim chance of succeeding.
While the US corporate tax system has gone largely unchanged since the Reagan administration reforms in 1986, corporate tax rates have been falling rapidly around the world, and a recent study by the free market think-tank, the Cato Institute warned last month that the US will soon have "the most unambiguously punitive business tax regime among the advanced economies", unless it begins to close the growing corporate tax gap with its competitors, particularly in Europe.
This study showed that the average corporate tax rate across Europe has dropped by 14% since the mid-1990s, meaning that the European average is now 16% lower than the US corporate tax burden. By contrast, America's average corporate tax rate has remained static at 40% for several years.
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