The Fiscal Cliff
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The Fiscal Cliff
"Mr. Speaker, It was the issue of taxes that led to me running for Congress in the first place. The question of how much of your money the government forces from us is central to the relationship of the individual with government and to the freedom of the individual. And in the past several years through calls, emails, and personal meetings, I have heard from many of my constituents about the necessity of having stability in the tax code. Making the current tax rates permanent for the vast majority of Americans, as this bill does, is a major accomplishment. No longer will the threat of major tax increases because of an expiring law hang over the heads of taxpayers. Providing tax certainty for individuals and businesses has long been needed and will allow them to plan and make decisions. Hopefully, it will help the economy grow. And finally having an answer on the death tax, although I prefer to abolish it entirely, is also critical for every farmer, rancher, and small business person in the country. The clearest reason to vote against this bill is because of what it does not do – limit spending. Too much spending, along with low economic growth, is the reason that our debt is mounting and that our children’s future is in peril. This bill is a missed opportunity to take meaningful action to deal with that problem, and I supported efforts to have significant spending cuts included in this measure. But it is not our last opportunity. It is always possible to justify voting against a bill for what is not included in it. One must go further and ask, 'What happens if this bill is defeated? Will the result be better or worse for the country?' We also have to make a judgment on what is possible with the current cast of characters that the American people have elected to office. It does no good to imagine some ideal measure that could never pass the Democratically-controlled Senate or that President Barack Obama would never sign into law. I am a conservative, and I am also a realist. The answers to those questions lead me to conclude that it is better to approve this bill at this time, understanding that we must use the next few weeks of discussion about the debt limit to find a way to significantly reduce spending and begin to get our economic house in order. House Republicans do not have to accomplish everything in one bill, but time is running out for us to get spending under control. In coming weeks, we will need to consider every tool at our disposal to convince the White House and the Senate on the imperative of cutting spending. Of course, there are provisions in this bill with which I disagree. For example, extending some of the tax credits from the stimulus bill and continuing to pay unemployment for an additional year discourage work and encourage further dependency on government. But they total about $100 billion out of a $4 trillion bill; the rest of the “cost” is due to extending tax provisions that have been in place for more than a decade. Stepping back and looking at the whole picture, it seems clear to me that preventing a tax increase for most Americans and making all tax rates permanent is an important step for families all across the country and for the economy as a whole. Other provisions contained in this bill are important to the people in my district. One would extend the current farm bill for the remainder of the fiscal year, allowing farmers and their bankers to make decisions on planting. That provision also prevents the price of milk from doubling this week. Another section prevents the 27% cut in Medicare reimbursement to doctors, which would have made it very difficult for Medicare patients to find a physician to treat them.
Tax Relief Tax Brackets – permanently extends the 10% tax bracket and the 25%, 28%, and 33% tax bracket on income at or below $400,000 for individual filers and $450,000 for those married filing jointly Capital Gains & Dividends – makes permanent the 15% top capital gains and dividends rate up to $400k (singles), $450k (married); 20% rate for both above threshold. Death Tax – permanently extends current policy on portability and unification with a $5M exemption indexed for inflation and a 40% top rate Alternative Minimum Tax (AMT) – permanently indexes AMT for inflation PEP and Pease – permanent relief from the Personal Exemption Phase-out (“PEP”) and the itemized deduction limitation (known as Pease) for incomes under $250,000 (single), $300,000 (married)
Tax Extenders – extends several current business and energy tax policy provisions Congressional Pay Raise
Statutorily prevents any automatic pay raise for Members of Congress for 2013 Medicare and Other Health Provisions Doc Fix – prevents the scheduled 26.5% cut to Medicare physician payments through December 31, 2013 Therapy Cap – extends the exceptions process for the Medicare therapy cap through December 31, 2013
Rural Health – extends current policy for rural health including the ambulance add-on payments, the payment adjustment for low-volume hospitals, and the Medicare-Dependent hospital (MDH) program. Agriculture Farm Bill – extends the current 2008 Farm Bill for 1 year at no additional cost to the taxpayer and reinstates the disaster programs for livestock, commodity, and specialty crop producers (except the SURE program) for 2012 and 2013 Sequester
Sequestration is turned off for two months and paid for with a reduction in discretionary spending cap for 2013 and 2014, and expanding eligibility for Roth conversion. The additional $1.2 trillion in spending cuts through sequestration will continue. Unemployment Insurance (UI) Includes a 1 year extension of current extended weeks for UI
What was the Fiscal Cliff?
The so-called “fiscal cliff" refers to a combination of tax increases and automatic, across-the-board spending cuts set to begin under current law in January 2013. Below is a more detailed look at exactly what changes at the beginning of the year. Taxes According to the Tax Policy Center, if the current tax provisions are allowed to expire, about 90 percent of all Americans will see their taxes raised. This increase would be the largest tax hike in American history. Expiring Taxes and Policies by the Numbers The following provisions are just the highlights. In fact, dozens of tax provisions affecting individuals and businesses expire at the end of the year. You can read the Congressional Research Service report An Overview of Tax Provisions Expiring in 2012 by clicking here. You can find more detailed information on each tax provision by clicking the hyperlink at the beginning the bullet point. Bush-era tax cuts:
Other tax increases:
New Taxes:
Other policies expiring:
Automatic Spending Cuts The automatic spending cuts or sequestration are mandated in the Budget Control Act to reduce the deficit by $1.2 trillion over 10 years. The cuts come from both domestic and defense spending, but many programs are exempt. Although defense spending makes up only 19 percent of the federal budget, it will account for 50 percent of the deficit reductions in the sequestration. There is widespread and bipartisan agreement that these cuts would have a severe impact on America’s national security and further harm the economy. These across-the-board cuts to defense would come on top of the nearly half-trillion dollars ($487 billion) in cuts already being implemented. Spending cuts by the numbers
Reports on the Fiscal Cliff Reports on Automatic Spending Cuts Email | Facebook | Twitter | Mac’s Blog | YouTube | Video Mailbox Related Documents:
Press Releases -
Thornberry proposes bill to delay Obamacare and stop across-the-board defense cuts
Related Files:
Highlights of H.R. 8, the American Taxpayer Relief Act of 2012
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