Sestak Announces Plan for Middle Class Tax Relief

Sestak Announces Plan for Middle Class Tax Relief

Sestak for Congress
Press Release
September 7, 2006

Lansdowne, PA — On Wednesday, former Vice Admiral Joe Sestak held an event with families to announce his plan for middle class tax relief. Joe Sestak’s plan will allow middle class families to more easily achieve what they want most: to raise our children well, to pay for college, to save for our retirement, and to live a healthy life within a secure nation.

“When I was growing up in this district, with my six sisters and brother, our family was able to make ends meet, receive a good education and high quality health care,” Sestak said. “But today, it has become harder and harder to achieve the American dream. On the campaign trail, I have met countless workers facing higher costs for housing, healthcare, gas and college. At the same time they are facing declining real wages. They are forced to do more with less, while corporate profits continue to grow and the wealthiest one percent of Americans continues to get richer. President Bush, Curt Weldon and the Republican Congress are moving our country in the wrong direction by ignoring the middle class and instead offering significant tax relief only to the wealthy few. When elected, I will push for tax relief for working and middle class families that spurs economic growth, expands opportunity for everyone, and stops President Bush from mortgaging our children’s future.”

Under the watch of President Bush, Curt Weldon and the Republican Congress, the middle class has been squeezed by declining real wages, soaring health care costs, rising college tuition, the skyrocketing cost of housing, and record high gas prices. Instead of addressing these concerns, Republicans have shifted the tax burden from the richest Americans to middle-class working families.

According to a 2004 Congressional Budget Office (CBO) study, since 2001, President Bush’s tax policy has shifted federal tax payments from the richest Americans to middle-class families. The impact of these tax cut measures are clear. For the bottom 20 percent of households, the combined Bush tax cuts averaged $250 each. The middle 20 percent received $1090, while the richest one percent received $78,460 in 2004.

Under the 2006 Tax Reconciliation bill that Curt Weldon voted for and President Bush signed into law last Spring, people with incomes between $40,000-$50,000 receive $46, people with incomes between $50,000-$75,000 receive $110, people with incomes between $75,000-$100,000 receive $403, people with incomes between $100,000-$200,000 receive $1388, people with incomes between $500,000-$1,000,000 receive $5562, while those people with incomes over $1 million receive $41,977.

According to the 11th Annual Report (The State of Working Pennsylvania 2006) released last weekend by the Keystone Research Center, when adjusted for inflation, the wages for the bottom 90 percent of Pennsylvania income earners fell between 2004 and 2005. The decline came despite rising profits and productivity and impacted workers at all levels. Between 1995 and 2000, median family income in Pennsylvania grew by 14.5 percent, buoyed by rising hourly wages. Between 2000 and 2005, however, median family income reversed course and fell 7.2 percent–from $55,281 to $51,300.

Sestak is seeking a new direction, when elected:

1. Sestak will fight for a simplified family tax credit. The credit provides a maximum credit of $3500 for a family with one child, $5200 for two, and a $7000 tax credit for a family with three children.

2. Sestak will push to create a single refundable college tax credit of $3000 per school year to help students pay for college, graduate school, and training.

3. Sestak will support a universal mortgage deduction to increase home ownership to all homeowners not just those who itemize deductions on their tax returns.

4. Sestak will push for a universal portable pension. This would replace the “alphabet soup” of 16 existing IRA-type accounts with a single portable retirement account for all workers. When workers change jobs, their 401(k) plans would be rolled into the portable pension so that they would be able to continue to make tax-free contributions.

5. Sestak will fight to reform the Alternative Minimum Tax (AMT), which may well be the largest middle class tax increase in history. Sestak will support legislation to increase the basic AMT exemption to $50,000 for single taxpayers, and $100,000 for married couples. He also supports increasing the phase-out rate of the AMT exemption to $250,000 and indexing the exemption and phase-out to inflation. The AMT, which was established in 1969, was originally meant to apply only to the exceptionally wealthy. However, since it was never indexed, it is suddenly hitting the unsuspecting middle class. Today, over 3 million taxpayers are subject to the AMT. If the problem continues unfixed, over 30 million taxpayers will be forced to pay the AMT by the end of the decade, hardly the rich tax evaders the AMT was meant to target.