I agree with those who have characterized the recently passed legislation to avert the fiscal cliff as a missed opportunity to comprehensively address our nations economic crisis. I voted for H.R. 8, the American Taxpayer Relief Act, because it made permanent the tax relief we have been fighting for throughout the past ten years, and it temporarily heads off an acceleration of the fiscal crisis that many economists forecast would have put our fragile economy back into recession. Making this tax relief permanent was a vital step, but much more work must be done before time runs out.
While we lost the fight for a full extension of the tax relief for individuals with a taxable income above $400,000 and couples with an income above $450,000, we permanently extended the lower tax rates for the vast majority of Idahoans. The legislation provides a permanent structure of income tax rates, capital gains and dividends tax rates and addresses the Death Tax, which was set to jump to 55 percent. A fix for the Alternative Minimum Tax (AMT) was also included, along with extensions of other tax credits that have benefited families and small businesses. Estimates indicate that without action the AMT would have impacted nearly 70,000 additional Idahoans, and additional Idaho farms would be subject to the Death Tax.
The legislation also temporarily prevents a cut in Medicare reimbursement rates, provides a little time to address the poorly designed spending cuts that would have begun this month, and it contains an extension of expiring Farm Bill programs.
I voted for the compromise because it mitigated what would have been an explosive tax increase on Idahoans, but I am disappointed the plan does not address the fundamental factors that have created a $16.5 trillion national debt. Without substantial spending cuts and reforms, this deal postpones the hard decisions required to get our fiscal house in order. Many of the fixes in the bill are temporary and require additional substantive action within the upcoming weeks and months.
The legislation also did not provide the comprehensive tax reform needed to repair our nations broken tax code. While progress was made in obtaining some long-term tax relief, the tax code is still just as complex, burdensome, unfair and anti-competitive as it was before this agreement. We have not yet reformed and simplified the tax code, and we have not yet addressed the corporate rate, which is the highest in the industrialized world. Additionally, the rate paid by many small businesses, which is also now so high that it puts them at a competitive disadvantage, must also be addressed. We must immediately work to enact pro-growth tax reform, which would simplify the tax code for all Americans, grow our economy and make American business more competitive. We must also immediately act to reform entitlement programs, including the Social Security and Medicare programs, which are on track to be insolvent within a generation. Systemic reforms are necessary in order to guarantee solvency of these valued programs for current recipients and future generations. The American Taxpayer Relief Act does not provide these needed reforms. Some may be breathing a sigh of relief that the fiscal cliff was avoided, but our work is far from over. I will continue to work for a comprehensive solution to our national fiscal problems that incorporates discretionary spending reductions, mandatory program reforms and wholesale changes to our tax code to improve our economy. We must not miss the opportunity to build off this short reprieve and work together to enact long-term, comprehensive reforms that will provide a better economic future for our great nation.
Mike Crapo, a Republican, is Idaho's senior senator.