Johnny Isakson, United States Senator

Johnny Isakson's Position Statement on Taxes

I believe that the voters of Georgia elected me to help bring much-needed tax relief to their families and their businesses.

Tax Credits for Homebuyers

I believe our economic problems start with the housing market and that we must restore the house market if we are going to restore our economy. To draw buyers back to the market, I have introduced a proposal to invigorate housing demand and to boost the economy by expanding the first-time homebuyer tax credit passed by Congress earlier year.

Specifically, my legislation would increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers. My legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit so that there is no income limit for eligibility. Finally, the legislation would extend the tax credit for one year from date of enactment and would still allow homebuyers to claim the credit on their 2009 tax return for purchases made in 2010.

My legislation has been endorsed by the U.S. Chamber of Commerce, National Association of Realtors, Business Roundtable Housing Working Group and Mortgage Bankers Association.

I am pleased the Senate has twice passed my proposal overwhelmingly, and I will continue to push this tax credit until it is signed into law. I have pushed hard for a non-repayable tax credit for homebuyers because I know that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. I was in the real estate industry in Atlanta at the time, and the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can. Today, in the United States, one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time for our country.

Our economic crisis started with housing, and our economy will continue to suffer unless we do something now to immediately fix the housing problem.

Making the 2001 and 2003 Tax Cuts Permanent

In 2001, Congress passed a tax relief package, the largest in a generation. This plan has reduced taxes for everyone who pays income taxes, eliminated the death tax and marriage penalty tax, and increased the child tax credit.

I worked for passage of the tax relief package and one of my top priorities in the Senate is to make these tax cuts permanent. Currently, this tax relief is set to expire in 2011, meaning that taxes will increase for American families and businesses unless we act to make the tax cuts permanent. I will do everything I can to see that we take action.

Jobs and Growth Package

I also supported the Jobs and Growth Package to speed up the 2001 tax cuts, decrease the double taxation of dividends and capital, and increase small business expensing for new investment. I have always believed that taxpayers’ money is best left in the hands of the people who earned it. This package immediately sent tax money back to an estimated 2.4 million Georgians and 614,000 Georgia businesses of all sizes.

Capital Gains Taxes

I believe one of the major barriers to economic growth is the enormous amount of capital held hostage by capital gains taxes. Many Americans have mature stock, bond or real estate investments that they would be eager to sell and reinvest. This reinvestment would stimulate the economy, improve the stock market and create jobs. But instead, billions of dollars that could be available for investment sit idle because of capital gains taxes. I will look for ways to remedy this.

Alternative Minimum Tax

I believe the alternative minimum tax (AMT) is an overly burdensome tax that is hitting more and more middle income families every year. The AMT was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes. However, the AMT is not indexed for inflation, and this factor combined with the recent reductions in the regular income tax has greatly expanded the potential impact of the AMT. If Congress does not act, a growing number of taxpayers will become liable for the AMT. I will work with my colleagues in Congress to alleviate this tax burden.

The Tax Code Termination Act

The tax code is a source of anxiety and frustration for many Americans, and I believe that the time has come to pursue fundamental changes to our tax system. It is my opinion that the only way for all types of reform to receive a fair hearing is to lay all options on the table. Therefore, I have introduced legislation that terminates the current tax code and forces Congress to come up with a simpler, fairer tax code.

My legislation would repeal the U.S. tax code and create a commission charged with reporting to Congress plausible reform options. The Tax Code Termination Act (S.747) would create a commission that would analyze reform options and report its findings to Congress. The commission would review the current tax code with respect to its impact on the economy, families and the workforce, its compliance costs to taxpayers, small business and corporations, and the Internal Revenue Service’s ability to administer the current code.

The commission would also consider whether the income tax should be replaced with a flat tax or a national sales tax, and would determine if tax systems imposed in other countries could provide more efficient and fair methods of taxation here in the United States. The commission would identify the transition costs associated with any change to the present federal tax code. The commission would also be required to report on the potential impact of such recommendations on the U.S. economy and on the government’s ability to collect revenue. Additionally, the potential impact of these recommendations must be presented and reviewed from both static and dynamic scoring models.

The bill would terminate the current tax code on December 31, 2010. History has taught us that if we don’t impose a deadline and terminate the tax code by a date certain, overhauling our inefficient system is nearly impossible.

Fair Tax

Just as I did in the 109th and 110th Congress, I am again a cosponsor of S.296, the Fair Tax Act of 2009, which would repeal the tax code and establish a national sales tax. In the 110th Congress, I also a co-sponsored S.1040, the Tax Simplification Act of 2007, which would repeal the tax code and replace it with a flat tax. Our current tax code is overly complex and must be simplified. Congress owes all of us a simpler fairer method of taxation.