As you may know, in early January, 2013, I voted in support of H.R. 8, which averted most of the fiscal cliff through a combination of tax and policy extensions and revisions. I supported the bill because the Congressional Budget Office and others projected that the economy would have returned to recession in 2013 if we had gone off the tax cliff. It would have resulted in an average $3,000 tax increase per year for Idaho families (between $50,000 and $70,000 income) and an increase of $1,400 in taxes for individuals (between $30,000 and $40,000 income). I simply could not support these tax increases. Following passage in the Senate, the bill passed in the House 257 to 167 on January 1st and was signed into law by the President.
Though I supported H.R. 8, I remain a strong proponent of a more comprehensive approach to solving our nation’s long-term fiscal crisis. That said, the unfortunate reality was that under current law, if nothing was done, every taxpayer would have been hit with a significant tax increase. H.R. 8 blocked those tax increases for nearly all Americans -- effectively lowering the taxes they were to begin paying on January 1. It is also important to note that H.R. 8 provides permanent tax certainty for individuals, families, businesses, and farmers who are ready to invest their money but have been reluctant to do so without knowing how much they’ll be taxed. Resolution of the tax rate uncertainty is critical to economic recovery and job creation.
Among its many provisions, the American Taxpayer Relief Act will:
• Protect individuals making less than $400,000 and families making less than $450,000 from the tax increases that were scheduled to occur in current law;
• Allow the temporary payroll tax cut to expire;
• Enact a permanent patch to the Alternative Minimum tax which was set to impact up to 30 million Americans;
• Provide a $10 million per couple exemption from the estate tax;
• Prevent a 27 percent reduction in payments to Medicare providers;
• Extend unemployment benefits through 2013.
While this bill prevented the country from going over the fiscal cliff, I was disappointed that it was not the comprehensive legislation needed to begin paying down the national debt and bring stability to the economy. In fact a comprehensive plan to fix the debt is now needed more than ever. For the last several years I have been urging Congress to pass a package that includes reductions in discretionary spending and major reforms to both entitlement programs and our outdated tax code. These reforms should be aimed not only at reducing our deficit in significant ways, but at creating a pro-growth tax code and putting entitlement programs on a much stronger path toward solvency for both current and future retirees. I have been a leader of a group of House members called the Go-Big Coalition which is advocating an aggressive approach toward reducing the deficit by $4-$6 trillion over the next ten years.
Let me make it clear that I supported the lower tax rates on all American families established by the Bush tax cuts. The reality however was that those rates ended on December 31, 2012, and tax rates increased on every American the next day. Within the context of that reality, my goal in the debate was to prevent a permanent tax rate increase for as many Americans as possible. That is why I supported H.R. 8. Like many Idahoans however, I was disappointed that the loudest arguments as we approached the fiscal cliff were about the issue of whether to let tax rates go up while discussions about long term changes to the way government operates were neglected. I have never believed that raising taxes is a legitimate solution to the budget crisis we are in.
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