I have long supported tax relief for families and small businesses in South Dakota. Tax relief accomplishes two important goals: it puts more money in the pockets of South Dakotans, and it grows the economy, which is why I have consistently supported legislation that makes our tax code simpler, fairer, and allows taxpayers to keep more of their hard earned money. In 2001 and 2003, Congress acted to reduce the marginal tax rates for families and small businesses, increase the child tax credit, and repeal the unfair death tax. However, this important tax relief was set to expire at the end of 2010.
Fortunately, on December 17, 2010, the President signed into law a two year extension of these rates. The enacted tax provisions will help grow the economy and will prevent taxpayers from having to pay even more in taxes. Current income tax rates were extended across the board, keeping the tax burden low on both low and middle income families as well as small businesses. Tax rates for capital gains and dividends were extended, as well as marriage penalty tax relief and a short term fix to the alternative minimum tax. This bill included a provision to prevent a jump in the estate tax to a 55 percent rate for estates over $1 million by setting the rate at 35 percent for estates over $5 million. By addressing the death tax, farmers, ranchers, and small business owners are provided with certainty about the costs of passing on the family farm or small business to their children and grandchildren. The child tax credit was also expanded to help ease the tax burden on American families.
This piece of legislation also included various other tax provisions. This bill included extensions of tax measures such as the state and local sales tax deductions, the tax credit to allow teachers to buy supplies for their students, and the biodiesel tax credit. Nearly all of these tax provisions have been previously extended by Congress. Like all legislation, this bill was not perfect. However, failing to act would have meant higher taxes for the American people at the beginning of 2011.
Despite this success, Democrat leaders and the Obama Administration have proposed increasing taxes on everything from soda pop to small businesses. Instead, I believe our tax policy should allow all Americans to keep more of their hard earned dollars as well as encourage individuals to plan, save, and invest for retirement. As a member of the Senate Finance Committee, which oversees our nations tax laws, I will fight to reform our outdated and unnecessarily complicated tax code, provide meaningful tax relief, prevent tax hikes, and put our economy on sound footing.