MEDIA – Citing the best interests of his constituents, Congressman Joe Sestak (PA-07) helped the House pass legislation to extend current tax rates and unemployment benefits, and continue key middle class breaks from the Recovery Act passed in 2009. HR 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, was approved by a 277-148 margin and, having passed the Senate, was sent to the President for his signature.
The Congressman had fought hard for focusing the tax cuts on the middle class and to avoid expensive breaks for the wealthiest two percent, including a costly estate tax exemption for multi-millionaires, which are ineffective in stimulating the economy. He had voted against going on adjournment in September, among other times, when the Democratic leadership had not brought such a bill to the floor. However, he voted in favor of HR 4853 because it was the only way to avoid a tax increase on working families and provide assistance to millions of Americans looking for work in a difficult job market.
“The facts on the ground in my District make a ‘yes’ vote the clear choice on this package,” said Congressman Sestak. “Instead of a tax increase, working families will see a tax cut that will help them provide for themselves and their families in a still recovering economy. This deal is also a backdoor stimulus. By extending unemployment benefits and providing a payroll tax cut to workers, we are injecting more money into our economy to drive up consumption and demand, and lead to much more hiring. Economists, including Mark Zandi of Moody’s economy.com, have already upgraded their forecasts for next year, anticipating passage of this compromise.
“The necessity of this bill’s passage should not be confused with the outrageous process that has brought us to this point. It is galling that we did not take action until one side threatened to raise taxes on the middle class and the other side avoided the issue until after a challenging election, and I hope the lesson is learned to stand up for your principles no matter the impact on electoral prospects. The compromise is imperfect, but, at the end of the day, working families in my District and those who have lost their jobs are hurting. We cannot let these working families suffer because of the political calculation that got us to this point.”
The Congressman supported an amendment offered to adjust the estate tax provision in the bill. The change would have saved $23 billion and affected only 6,600 of the wealthiest multi-millionaires in 2011. Although it failed, Congressman Sestak voted for the final bill because he believed the potential risk of allowing tax rates to increase for all families in this fragile economic recovery was too great.
The bill, passed today takes the following steps:
- Temporarily extends — for two years, through 2012 — the reduced tax rates and other tax benefits enacted in 2001 and 2003 that expire on December 31. The extension of these tax cuts, which would apply to all income levels, would cost $407.6 billion over 10 years, according to the Joint Committee on Taxation (JCT).
- Extends unemployment insurance for 13 months.
- Allows small businesses to deduct all of their capital expenditures for one year.
- Cuts the payroll tax paid by employees by two percentage points for one year.
- Reduces the maximum estate tax rate to 35%, while increasing the exemption amount to $5 million.
- Provides a two-year “patch” to prevent the alternative minimum tax (AMT) from affecting 25 million taxpayers.
Specific tax provisions extended include:
- Reduced Marginal Rates — Extends through 2012 the 10% bracket created under the 2001 tax law, and also retains the reduced marginal rates of 25%, 28%, 33%, and 35% bracket.
- Capital Gains & Dividends — Extends for two years the reduced 15% maximum tax rate for capital gains and dividends, as well as the 0% rate for those in the lowest two tax brackets.
- Child Tax Credit — Extends through 2012 the maximum child tax credit of $1,000 as well as provisions that expand eligibility for the refundable credit.
- “Marriage Penalty” Relief — Extends for two years the size of the 15% tax bracket and the standard deduction for married couples filing a joint tax return intended to prevent the “marriage penalty” that led some joint filers to pay more than they would as unmarried individuals filing separately.
- EITC — Extends through 2012 the rules that simplified and expanded eligibility for the Earned Income Tax Credit (EITC) and increases the income range at which the credit phases out for married couples.