Hultgren, Roskam among those who voted ‘no’ on fiscal cliff deal
By Jenette Sturges jsturges@stmedianetwork.com January 3, 2013 4:59PM
Congressman Peter J. Roskam was the speaker during Sunday morning's September 11th Memorial Ceremony at Barrington Memorial Park. | Brian O'Mahoney~for Sun-Times Media
What the new law means to you
Everyone will pay more Social Security payroll tax. The payroll tax will return to 6.2 percent from 4.2 percent where it has been since 2010 — costing the average worker about $1,000 a year. This is a tax cut that Illinois residents barely noticed. Shortly after it took effect, the state raised the income tax rate 2 percentage points.
Decade-old income tax cuts stay in effect on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.
Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.
Capital gains taxes and taxes on dividend income would increase to 20 percent from 15 percent for those with income exceeding the $400,000 level, $450,000 for families.
The alternative minimum tax will be permanently indexed to inflation, preventing nearly 30 million middle- and upper-middle-income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.
Various tax credits are extended for five years, including the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated “bonus” depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.
Extends jobless benefits for the long-term unemployed for one year.
Article Extras
Updated: February 5, 2013 6:21AM
The nation may have tip-toed away from the edge of the fiscal cliff — a series of tax hikes and across-the-board spending cuts aimed at reducing the national debt — but lawmakers warn the country is hardly back to solvency.
In a deal brokered late Tuesday evening, the House passed a bill that raises income taxes on individuals earning more than $400,000 as well as capital gains taxes for high earners, while avoiding major tax increases for average and low-wage workers.
The deal also postpones deep cuts in defense and domestic spending for two months to give Congress time to work out a more permanent plan.
According to the Tax Policy Center, the legislation will leave households earning $100,000 to $200,000 with 4.4 percent more after-tax income than they would have had if a deal had not been reached. For those that earn $200,000 to $500,000, the difference is 5.1 percent.
That’s the good news; everyone will keep less of what they earn than they did in 2012. Families in the former tax bracket will see their take-home incomes shrink by 1.7 percent, while those in the latter will bring home 1.3 percent less, according to TPC data.
Local foes
Rep. Randy Hultgren, R-14th District, whose newly drawn district includes a part of Naperville, was one of 167 members of the House who voted against the deal.
“I certainly didn’t want to go over the fiscal cliff,” Hultgren said Wednesday. “But the bigger threat to our nation is our out-of-control spending. It is absolutely going to affect our quality of life and the quality of life for our children and grandchildren.”
Hultgren said although he campaigned on a pledge to not raise any taxes, the automatic tax increases that would have resulted had a deal not been brokered amounted to the lesser of two evils.
“I’m very supportive of not raising taxes on anybody,” he said. “My frustration, however, is the amount of debt we have, the spending that continues.”
Hultgren said postponing decisions on deep spending cuts would cost taxpayers another $600 million.
Also voting against the deal for similar reasons was Rep. Peter Roskam, R-6th District, whose district also now includes a part of Naperville.
Stephanie Genco, Roskam’s communications director, echoed comments the legislator has made that draw parallels between the agreement and his home state’s approach to money management.
“While there were elements of the bill that Congressman Roskam thought were very positive — namely, keeping tax rates low for the majority of Americans — he ultimately could not support the bill without any spending cuts,” Genco said in an email. “The United States is $16 trillion in debt, and we cannot afford to let President Obama continue to run the country like Pat Quinn runs Illinois.”
Hultgren and Roskam joined fellow Republicans Bobby Schilling of Moline and Joe Walsh of McHenry in casting the only votes against the measure to come from the 18-member Illinois congressional delegation.
Foster welcomes
compromise
Rep. Bill Foster, a Naperville Democrat who was sworn in as a new member of the House on Wednesday, called the New Year’s deal imperfect but “encouraging.”
“While I don’t think the package passed last night by the House was perfect, I do think it’s encouraging to finally see Congress come together to pass bipartisan legislation,” said Foster, who will represent the new 11th Congressional District, which includes parts of Aurora, Naperville and Joliet.
“I hope that we can continue to follow this model of bipartisan compromise and look forward to working with my colleagues to put forward legislation that both Democrats and Republicans can support.”
Over the next two months, Congress will be faced not only with decisions on spending cuts, but with another vote on the debt ceiling — a vote that does not increase the country’s debts, but allows the Federal Reserve to borrow to pay for debts already incurred.
Historically Congress has raised the debt ceiling dozens of times previously with little quarrel.
But in 2011, partisan fighting nearly killed a rise in the debt ceiling, which, in turn, nearly resulted in the United States defaulting on its debts.
Another vote to raise the debt ceiling will need to be cast by March to keep the U.S. from defaulting.
“I don’t want to see us default, but we can’t keep doing this every year, maxing out the credit card and raising the credit limit,” said Hultgren.
Biggert support
Republican Rep. Judy Biggert — who lost to Foster in the election for the new 11th District — cast a “yes” vote, her last in office, to avoid the fiscal cliff.
She reportedly spoke out in a closed-door meeting of House Republicans, urging colleagues to not throw out the package.
Biggert’s office could not be reached directly on Thursday.
The House voted 257-167 to approve the agreement. Voting yes were 172 Democrats and 85 Republicans. Voting no were 16 Democrats and 151 Republicans.
Susan Frick Carlman contributed to this story.
