Despite repeated claims to not raise taxes on the middle class, that is exactly what the U.S. Senate did yesterday, with President Obama’s blessing. In a deal that was overwhelmingly approved (89-8), senators agreed to a deal that would avert the “fiscal cliff”. The bill raises taxes on individuals making more than $400,000 and couples making $450,000. However, there is no provision in the bill to extend the payroll tax cut.
The government temporarily lowered the payroll tax from 6.2% to 4.2% in 2011. That cut expired on New Year’s Eve and it was not extended in the deal reached by the senate late Tuesday night. That means most Americans will receive smaller paychecks, beginning immediately.
The senate bill also extends unemployment benefits for one year and keeps the estate tax threshold at $5 million.
Both of Iowa’s senators voted against the deal, for different reasons. Democrat Tom Harkin complained that the bill did not raise taxes more. It “makes tax benefits for high-income earners permanent, while tax benefits designed to help those of modest means and the middle class are only extended for five years,” Harkin said.
Senator Chuck Grassley opposed the bill because it does not to enough to address spending cuts.
“It’d be one thing to raise taxes to reduce the deficit, but that’s not what this deal does. It’s a fiscal farce to raise taxes and hurt economic growth only to fuel more government spending with record deficits and debt,” Grassley said. “People at the grass roots want Washington to spend less, not more. Failure to deal with spending lets them down.”
Other Republicans opposing the bill include Rand Paul (R-Kentucky), Marco Rubio (R-Florida), Mike Lee (R-Utah) and Richard Shelby (R-Alabama). The fate of the fiscal cliff bill is now in the hands of the Republican-controlled U.S. House.
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