Leaders of divided nation justified in tax compromise
Although much less than it could be, the tax compromise passed by Congress was necessary to avoid senseless tax increases and arbitrary, economy-damaging spending cuts. A sigh of relief was heard when the news broke, and stock prices jumped. We commend House Republicans who supported the bill, including Rep. Bill Young of Pinellas, House Speaker John Boehner and House Budget Chair Paul Ryan. This is not the bill they would have written. They faced the political reality that voters have kept Obama in the White House and preserved the Democrats' majority in the Senate.They recognized that failure to compromise would have caused widespread financial disruption. To cite just a few examples, doing nothing would have allowed across-the-board spending cuts to soon force the FAA to lay off air traffic controllers and make many doctors drop Medicare patients. If the Florida delegation had gotten its way, the compromise would have failed. Voting against the bill were Republican Sen. Marco Rubio and House Republicans Sandy Adams, Gus Bilirakis, Connie Mack, John Mica, Jeff Miller, Richard Nugent, Bill Posey, David Rivera, Tom Rooney, Dennis Ross, Steve Southerland, Cliff Stearns, Daniel Webster and Allen West. We think they were wrong, even though there's a lot to dislike in the bill. It was almost entirely a tax cut, not a spending cut. It does not solve long-term problems. Many taxpayers will have less take-home pay because two percentage points were returned to the payroll tax rate for Social Security. In 2012 and 2011, the rate was 4.2 percent instead of the usual 6.2 percent. But it's unfair to call this a tax increase because it was always considered to be a temporary tax holiday to help revive the economy. Holidays don't last forever. Taxes will also increase for a taxpayer making $400,000 or more a year or a couple making over $450,000. The top rate will increase from 35 percent to 39.6 percent. If you're at that income level and earn an extra $50,000, you'll only keep $30,200 of it instead of $32,500. Complaints about this increase are understandable, yet upper income workers still have plenty of incentive to work harder or longer and earn more. The biggest failure of the plan is that it continues to avoid making the difficult spending decisions sure to be necessary unless the economy makes a surprising and miraculous recovery. Simplistic spending cuts that almost no one thinks are smart were postponed for two more months but not dealt with. And the compromise doesn't have anything to say about the debt ceiling which the nation will bump up against in two months. What the bill will do is avoid shooting ourselves in the foot with policies that were sure to cause another recession. It also kills a scheduled increase in the Congressional pay — if anyone doesn't deserve a raise, it is this Congress. More significantly, it sets some new tax rates that don't phase out the way the Bush tax cuts did. The new baseline for revenue will provide more accurate estimates of future liabilities, and make it easier for our federal leaders to deal honestly with the costs of an aging population. When they do that, our representatives will deserve a raise.