A week ago, President Obama and Congress avoided sending the country over the fiscal cliff, at least for a few months. Senators Pat Roberts and Jerry Moran and House Representative Tim Huelskamp have issued their statements about their positions on the last second agreement.
Nose against the ceiling
Representative Huelskamp said he felt the legislation on Jan. 1 to raise taxes by $620 billion, increase spending by $56 billion, and turn off the sequester for two months only allows a serious infection in the country’s finances to fester. With the debt ceiling already met, it’s almost time to sit down and pay bills, and the money is going to have to come from somewhere.
Republican Senator Roberts takes a hard-line stand with his unwillingness to allow tax increases.
“Make no mistake: I will vigorously fight to stop President Obama and Washington liberals from raising taxes and increasing deficit spending as America faces serious debt and fiscal crisis in the new year,” Roberts said in a statement. He feels the debt ceiling enables conservatives to force spending reductions, like reducing funding to the Supplemental Nutrition Assistance Program (formerly food stamps) in order to extend the current farm bill into 2013.
Senator Moran said he, “voted against a (debt ceiling) increase two years ago and want Kansans to know I will not vote to allow President Obama’s administration to borrow more money unless we substantially change the way the government does business and we significantly reduce spending,” he said. “There is no flexibility here—our country’s future is as stake and our children’s ability to pursue the American dream at risk.”
Still, all three congressmen felt preventing a tax increase for the vast majority of Americans was a successful outcome.
“Kansans have families to raise, businesses to run and jobs to do,” Senator Roberts said. “They deserve certainty from their government and decisive action from their elected leaders which is why I voted to provide permanent tax relief to protect more than 99 percent of taxpayers.”
By voting to extend the tax cuts enacted during the Bush presidency, Congress helped workers avoid seeing another three to four percent bite out of their paychecks higher plus a return to the “marriage penalty” which requires couples filing jointly to pay more in taxes than if they were single.
“I voted to keep every cent possible in the paychecks of Kansans so they can get on with planning their futures while we go back to work to cut spending,” Roberts Said.
Now, tax increases will go into effect only on income over $450,000.
Death and taxes
Huelskamp and Moran endorsed the decision to maintain the current $5 million death tax exemption, indexing it for inflation. According to Dennis Call with BMI of Great Bend, this is a good move.
“If the death tax exemption had been reduced to $1 million as it was before, it would have been devastating for many small businesses and farms,” he said. The provision taxes the value of an estate by 40 percent over the $5 million threshold.
“By keeping the death tax at a $5 million dollar threshold, allowing for up to $10 million per married couple to be shielded from taxation for future generations, families will be able to more confidently plan for the future,” Moran said.
Huelskamp also endorses extending bonus depreciation and expensing for business.
“I didn’t really see it coming but I’m glad they did it,” Call said.
This allows a business to invest in equipment and write off the expense in the same year, rather than depreciating it out over several years.
“If you can depreciate the expense all at once, it lowers your taxable income more, which ultimately means you pay less tax that year,” Call said. It makes it easier to afford to make capital investment in the company.”
This investment will help to make a company more competitive and more efficient, which will allow it to grow, and hopefully create more jobs and more national wealth, he said.
Huelskamp also fought to enact a permanent alternative minimum tax (AMT) fix. Call says the tax ensures that people who earn over a $48,450 or couples earning above $74,450 and have several deductions will not end up paying little to no tax.
The fix is the threshold where that income cut-off is. Had the AMT fix been allowed to expire, that would have lowered the threshold to it’s 1969 level of $22,500 for individuals and $45,000 for couples. This would have made many average Americans susceptible to the tax.
According to the Social Security Administration’s national average wage index, in 2011, $42,980 was the average income in America.
Farm bill flop
Instead of approving a five-year farm bill, Congress agreed to a nine-month extension of the 2008 farm bill. Huelskamp spins this, describing it as, “providing farm policy certainty for this year.”
Basically, this sends farmers and congress back to the drawing table to start over with coming up with another farm bill. The House Agriculture Committee will take this up on Feb. 27.
“I am pleased that the final agreement also includes an extension of the 2008 Farm Bill through the end of September 2013,” Senator Pat Roberts said in a statement. “While this extension is not the best possible bill, I believe it is the best bill possible at this time. It provides consumers certainty by avoiding the dairy cliff, and it provides certainty to our producers and their lenders as Congress continues work on a Farm Bill in 2013.”
According to GOP.gov, if the farm bill had not been extended, it would have forced the federal government to observe a 1938 law requiring it to help support prices by paying inflated prices, which would eventually mean doubling the price of milk for consumers.
No new raises
While the rest of the country waits and watches to see what agreements, if any, the President and congress can come to in the coming months, taxpayers can be assured of one thing. Congressmen will be feeling a little bit of the pain their constituents may be feeling, as there will be no congressional pay raise this year. In order for the above provisions to be made, conservatives insisted the anticipated increases of $900 to $1,000 be cut. At least that seems fair.