Avoiding the fiscal cliff saved 97 percent of American businesses from a tax increase, according to the White House, but the economy is not out of the woods yet. The 113th Congress has lots of work to do to keep the economy on track, including deficit reduction and shoring up the Highway Trust Fund in the long term. The new Congress begins its work on Thursday, Jan. 3.
House and Senate Republicans and Democrats agreed to legislation in the final hours of 2012, avoiding what many referred to as a fiscal cliff of tax increases and spending cuts that would have affected most families and businesses. Without the action, the U.S. could have faced the possibility of recession in the near future according to the Congressional Budget Office.
The new legislation allows a payroll tax cut to expire that for the past couple of years decreased the tax workers pay to help fund Social Security. An employee’s share of the 12.4 percent Social Security tax was reduced to 4.2 percent in 2011 and 2012. It now returns to 6.2 percent. According to reports, a worker earning $50,000 a year will see approximately a $1,000 tax increase.
Many truckers and trucking businesses will benefit from portions of the tax agreement, but truckers do have reasons to be concerned about the long-term health of the economy and how the nation will pay for infrastructure in the future.
“This agreement will prevent taxes from going up on the majority of small-business truckers who file as individuals,” said Ryan Bowley director of legislative affairs for the Owner-Operator Independent Drivers Association. “However, it does not provide a long-term solution to our nation’s deficit challenges.”
Bowley says OOIDA will remain focused on ensuring that the highway taxes paid by truckers are not raided to pay for other government obligations in the name of deficit reduction.
Unlike the deficit-reduction plan by Congress and President Clinton in the 1990s, the Highway Trust Fund does not contain a large surplus. In fact, Congress has had to prop up the trust fund with about $35 billion since 2008.
The trust fund shortage has led to various theories for maintaining infrastructure. Some groups are pushing for toll roads and public-private partnerships to fund roads and bridges, but that means cost increases for the user.
One of the priorities for truckers is making sure Congress understands the problem.
“The 113th Congress must address the long-term stability of the Highway Trust Fund, and we look forward to working with Chairman Shuster, Chairman Boxer, and others on this important priority,” Bowley said.
U.S. Rep. Bill Shuster, R-PA, is the incoming chairman of the House Transportation and Infrastructure Committee, while Sen. Barbara Boxer, D-CA, continues as chairman of the powerful Senate Environment and Public Works Committee.
Millions of households and businesses affected
The legislation that avoided the fiscal cliff contains numerous provisions that affect families and small businesses.
One notable provision is the permanent extension of tax cuts for the middle class. The White House says approximately 114 million households will benefit from the extension of prior tax cuts that would have expired had the nation gone over the fiscal cliff.
The legislation raises taxes on the wealthiest Americans.
“This agreement will also grow the economy and shrink our deficits in a balanced way – by investing in our middle class, and by asking the wealthy to pay a little more,” President Obama said in a statement issued New Year’s Day.
“There’s more work to do to reduce our deficits, and I’m willing to do it,” he continued. “But tonight’s agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans.”
Both parties and the president acknowledged in statements that there’s still a long way to go to ensure longer-term progress. Visit the White House website for a fact sheet about the legislation.
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