Local delegations back compromise on tax hike

Rep. Chaka Fattah
Rep. Chaka Fattah
Posted: January 02, 2013

WASHINGTON - As Congress scrambled to sidestep some of the most painful effects of the fiscal cliff, local lawmakers generally looked favorably on one key compromise: raising the threshold for the income-tax hikes set to take effect Tuesday.

The provision to raise taxes on incomes of $450,000 and above, rather than at the $250,000 mark President Obama originally sought, won tentative praise from Philadelphia-area Democrats - and, crucially, some local House Republicans, too.

"It's better than the alternative," said Rep. Chris Smith (R., N.J.). Without an agreement to alleviate the cliff provisions, tax rates would rise on all incomes, he noted.

The increased threshold was a central part of a deal that had been agreed to, but not yet been voted on, by 10:45 Monday night.

Republicans generally wanted to see all existing income-tax rates extended, but some GOP House members from the region said they would consider supporting a bill that raised rates only for incomes of $450,000 and up. Their votes, if they approve of the final package in full, could prove crucial in the House, which has been hostile to bills with any tax hikes.

"I'm a reasonable person. I want to see the middle-class tax cuts continue," said Rep. Mike Fitzpatrick, a Bucks County Republican. "I know that I will be voting to do so."

Fitzpatrick was cautious, saying that he wanted to see the details in any final measure, but that he would back a plan that protects middle-class tax breaks "in a reasonable bill that is good for the economy."

While some Democrats worried about the lost revenue from moving the threshold, they said they favored any option that could bring about a compromise. Many had previously endorsed a higher cutoff for tax increases, saying that $250,000 does not necessarily make a couple rich in Philadelphia or New Jersey.

So while the move was a concession by Democrats, it also fit with the stances of several local officials.

"That would be an easy call for people from our region," said Rep. Robert E. Andrews (D., N.J.).

With a deal reached Monday night, the Senate was expected to vote late Monday or early Tuesday. The House would take up the plan as soon as Tuesday and would have to pass it by Thursday, when this session of Congress ends, or else the process would have to start over.

Sen. Pat Toomey, a Pennsylvania Republican who is a fierce advocate for lower taxes, said Monday he was still evaluating a potential compromise. He spoke before the final deal was reached.

Several other local lawmakers also declined to comment on any potential deal until it was officially announced.

While Congress officially went over the proverbial fiscal cliff Monday night as most Americans rang in the new year, quick action could still avoid any tangible impact of a slew of tax hikes and across-the-board budget cuts that will hit domestic and defense programs. All told, the economic pain would top $500 billion over the course of 2013.

Few would feel the effects of the cliff, though, until they saw a bigger bite out of their first paycheck or missed an unemployment check, giving lawmakers a brief window to avert any tangible impacts. Stock markets are closed Tuesday, preventing any immediate reaction.

Votes might be easier to come by Tuesday, given that taxes will have automatically gone up with the start of the new year. Any vote then could be cast as lowering taxes for some rather than allowing them to rise.

Rep. Pat Meehan (R., Pa.) has said he would have backed the "Plan B" bill discussed - but not voted on - last month to raise tax rates at $1 million and up, signaling flexibility on his part.

Rep. Allyson Y. Schwartz (D., Pa.) had previously backed the idea of beginning income-tax increases at $500,000, though she said she was willing to move.

"For me, I feel it's very important for us to get agreement to avoid tax increases for middle-class Americans and to do it today, tonight," Schwartz said, cautioning that she would need to see what is in the final package.

"On whatever basis we can arrive at an agreement, we should attempt to do so," said Rep. Chaka Fattah, a Philadelphia Democrat.

Republicans and Democrats from New Jersey and New York state, meanwhile, were working on a parallel track to try to get the GOP-controlled House to approve billions of dollars for relief after Hurricane Sandy.

With House Republicans skeptical of the $60 billion package approved by the Senate, the House planned to break the plan into two parts: a $27 billion bill that focused on immediate relief needs, which would be expected to pass with bipartisan support, and a $33 billion measure that addressed long-term projects.

The larger bill, Democrats said, would be a harder sell, particularly with the added challenge of trying to win two votes to pass the relief plan.

It was also unclear whether the Senate would take up the House version or leave after voting on the cliff compromise, raising the possibility that the Sandy aid bill would die and have to be reintroduced again in the new session of Congress.

Contact Jonathan Tamari at jtamari@phillynews.com or follow on Twitter @JonathanTamari. Read his blog, "CapitolInq," at www.philly.com/CapitolInq.

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