Hip, hip … well, let’s hold the “hooray” for now.
In the latest round of the fiscal cliff slugfest between Congressional leaders and the President, the House approved an alternative package to the spending-restraint “sequester” triggered by the Budget Control Act of 2011. But Speaker John Boehner (R-OH) threw in the towel on his “Plan B” to address expiring tax provisions.
NTU weighed many factors in its stance toward Plan B, which had much to recommend it: making permanent the 2001 and 2003 taxpayer relief laws for all Americans with taxable incomes below $1 million, cementing the “patch” that protects millions of families from paying the dreaded Alternative Minimum Tax, maintaining parity for dividend and capital gains tax rates, and providing a 35 percent death tax rate with an indexed $5 million exemption. All told, it was far and away a better alternative to President Obama’s calamitous scheme to raise taxes on a much broader scale, boost rather than curb various categories of federal spending, and condemn future generations of Americans to trillions more in debt.
Still, Boehner’s plan did open the door to higher taxes on job creators who declare their business income on 1040 forms; how much further that door would have swung open as the package moved through negotiations is anyone’s guess. Plus, Plan B’s omission of budget and entitlement reforms raised questions about what would accompany it – questions to which taxpayers had partial answers at best.
NTU is not among those who believe that to get the best deal, we should be willing to fall off the fiscal cliff. But at the point where it was being brought to the House floor, taking a pass on Plan B was the best among two difficult choices. As NTU has been reminding Members of Congress, even at this late hour there’s still time to avoid all the adverse tax implications associated with the fiscal cliff, redirect attention to specific spending reductions, and more aggressively commit to entitlement as well as fundamental tax reform.
Are we punch-drunk? No, especially if leaders on both sides of Pennsylvania Avenue read up on the history of fiscal consolidations done the right way, recognize the economic dangers of high taxes, and realize that serious spending reductions are the most effective way to keep our nation’s financial standing in the world from slipping further.
Read “Fiscal Cliff Part 2: Real World Solutions” for practical ways our leaders can overcome the stumbling blocks, and the priorities taxpayers should keep fighting for in the weeks and months ahead.