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EDITORIAL: That fiscal cliff is local


NOOOOOOOO! NOT IN THE LOCAL PAPER, TOO! But wait, the fiscal cliff really is a local issue. Nobody knows the exact impact a trip over the cliff would have here. But a few facts might help clarify why despite all background noise from alleged experts, whose blather has begun to sound like Christmas music at a box store, getting a fair deal out of Washington matters to Columbia County residents.

Tax increases and spending reductions will take effect with the new year unless Congress and the president can undo the law they created that imposed the cliff in the first place. Without new federal legislation, everybody who pays income taxes will pay more. In Columbia County that’s probably less than half the 62,864 people the U.S. Census Bureau says live here. Nearly 40% of our population is under 18 or 65 years or older, which makes it likely these folks are too young to have a taxable income or old enough to derive their income from sources that aren’t taxed the way pay checks are.

For the rest of us, President Obama wants to let tax breaks expire for individuals making $250,000 or more a year and keep lower tax rates in effect for all taxpayers with incomes below that amount. The Senate, where Democrats hold the majority, will approve that part of the president’s plan. But the Republican leaders in the House of Representatives, where the GOP is the majority party, have so far said that they won’t go along with an increase in anybody’s tax rate.
What sometimes gets lost in all the posturing is the reason for the fiscal cliff and all the efforts to avoid it: a shared assumption that the country should cut both our annual budget deficit and our national debt. The people who crunch real numbers know the deficit and debt goals can’t be achieved without some increase in taxes, because the impact of trying to do it only with spending cuts could cripple the tepid economy.
For the local connection, you have to think about what the deep and unfocused spending cuts would mean. Take school funding, for example. Not much money for education comes from Washington, but even small amounts matter. The New York State School Boards Association this week released data that showed the impact of lost federal aid to schools under fiscal cliff reductions. The average cut to school districts in this region would be between $80,000 and $140,000 in the upcoming school year.
To make up for lost federal funds mean the school districts would either have to raise the property tax levy by .3% – .4% –and remember that we face a 2% cap on property tax increases overall–or they will have to continue cutting programs. That’s not smart at a time when the academic performance of American kids again lags behind that of students in other countries.
But if districts vote to ignore the cap, then the federal spending cuts won’t be cuts at all; we’ll be paying higher federal and local taxes. That’s a shell game, not budget reform.
The president wants comparatively wealthy people to pay the same marginal tax rates they paid when Bill Clinton was president. Right now many of those people pay an effective tax rate that’s lower than the ones that apply to the rest of us. That’s not fair nor is it reasonable. Just look at the county.
Of the 25,499 households in Columbia County, 1,149 are estimated to have incomes of $200,000 or more a year. Not all of them would be affected if the president’s plan is adopted, so it’s likely that fewer than 4% of the households in this county would see any tax increase under the president’s plan. This isn’t soaking the rich, it’s a return to the notion that we all deserve equal treatment under our laws.
Newly elected Congressman Chris Gibson (R-19th) has said he will not renew his pledge to Grover Norquist to vote against any new tax. Mr. Gibson, who won a convincing reelection victory last month, deserves credit for showing far more independence than most of his GOP colleagues. But the real test lies ahead, because while there are certainly aspects of the president’s plan he doesn’t support, it is in the interest of his constituents that he and his colleagues vote for increases that restore some equity to our tax system rather than let everyone’s tax bill rise by default.

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