(Washington, D.C.) – Today, the U.S. House of Representatives will consider two bills that – if they become law – would prevent us from going over the fiscal cliff. “Compromise, by its very nature, dictates that neither side will get 100% of what they want,” said Rep. Steve LaTourette (R-OH). “While I would prefer that taxes not go up on any American, the fact is that we have a Democratic controlled Senate and a Democrat in the White House. The compromise bills that the House will be voting on today protect as many Americans as possible from tax increases, while at the same time ensuring we avoid the looming fiscal cliff.”
“The consequences of going over the fiscal cliff would be disastrous,” continued LaTourette. “Virtually all Americans, not just upper income taxpayers, would face an abrupt tax increase averaging more than $3,400 per household.”
If a compromise were not agreed to, the fiscal cliff would include abrupt tax increases on lower-income earners from a smaller earned income tax credit, child tax credit, and the elimination of the 10% tax bracket. The Alternative Minimum Tax would hit millions of middle class taxpayers for tax year 2012, just as higher earners face higher tax rates on income and capital gains and dividends. Meanwhile, the tax rate on investment income is scheduled to nearly triple. Ultimately, raising such rates on capital gains and dividends would negatively impact seniors, retirees and small businesses. On the spending side, many federal programs ranging from education to transportation to defense would be cut across-the-board. Payments to physicians serving Medicare patients would be cut by over 27%, and approximately two million unemployed workers will lose unemployment benefits.
“Going over the fiscal cliff would also damage our economy and increase unemployment,” said LaTourette. Indeed, the Congressional Budget Office estimates that going over the fiscal cliff would shrink the size of the economy by nearly 3% in the first half of 2013, putting our economy back into a recession and pushing unemployment back above 9%.
“Those who oppose this compromise are putting American taxpayers, small businesses and seniors at risk – all in the name of ideological purity. The stakes are simply too high for our elected officials in Washington to play politics with the lives of so many,” concluded LaTourette.
Details on the Plan B bills:
The Spending Reduction Act of 2012 (H.R. 6684) replaces the president’s defense ‘sequester’ with common-sense spending cuts and reforms, and reduces the deficit by an additional $242 billion over the original sequester. The bill focuses on stopping waste, fraud, and abuse in federal programs, eliminating government slush funds (including an ObamaCare slush fund), and reducing waste and duplication in government bureaucracies.
The Permanent Tax Relief for Families and Small Businesses Act of 2012 (H.J. Res. 66) permanently protects millions of taxpayers from President Obama’s tax rate hikes. The bill permanently extends current tax rates for everyone making less than $1 million, the $1,000 child tax credit, expensing relief for small businesses, and much more. Analysis by the nonpartisan JCT found it is a $3.9 trillion tax cut.
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