Foster’s Daily Democrat of Dover (N.H.), Jan. 3, 2013
"Another day older and deeper in debt
St. Peter don’t you call me ‘cause I can’t go
I owe my soul to the company store"
-- Merle Travis, "Sixteen Tons"
First recorded in 1946 by American country singer Merle Travis, "Sixteen Tons" tells the story of a coal miner forced to buy goods from the company-owned store at such high prices he never gets out of debt and thus can’t leave the mines.
It is an appropriate tune in the wake of Congress passing a deal at the eleventh hour -- plus minutes -- to stave off the fiscal cliff. While most headlines Wednesday morning ballyhooed tax hikes for the rich and avoiding the fiscal cliff, the real news was much more sobering.
Early reports put the price tag for the American Taxpayer Relief Act of 2012 at a collective $10 billion in added debt. That’s on top of the estimated $50,000 per head debt each one of us is already carrying as the result of government overspending. And because Congress chose not to renew the Social Security tax holiday, even many low-paid workers are going to see their paychecks lightened as soon as the new tax tables are distributed to employers.
(Editor’s note: While this tax holiday has to end eventually, we question why now with so many American’s still struggling.)
While it may be satisfying to know that some Hollywood elites, who make millions, will pay a million or two more in taxes, there should be no solace for we "little guys."
According to The Associated Press, households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013. Households making between $50,000 and $75,000 will face an average tax increase of $822. This analysis, from the Tax Policy Center, a nonpartisan Washington research group, projects 77 percent of American households will face higher federal taxes in 2013.
But wait; it gets even better (or worse, depending on your perspective.)
The compromise bill passed by Congress does not scuttle the sequestration of $1 trillion in spending cuts, scheduled to be shared between domestic and military spending. It only delays the cuts by two months, hoping the new -- but still divided Congress -- can do better. In addition, any decision on raising the debt ceiling has been put off to another day.
Then there are what appear to be the perks for special interests, the types of items traditionally used to buy votes:
-- Seven-year recovery period for motor sports entertainment complexes at a cost of $78 million over 10 years.
-- Accelerated depreciation for business property on Indian reservation. Cost: $222 million over 10n years.
-- Special expensing rules for certain film and television productions. Cost: $248 million over 10 years.
Such add-ons may be worth Congressional action at some point, but why now and to the benefit of whom?
None of what is written here is to deny Congress needed to do something with the Bush era tax cuts expiring and the pending financial damage hanging in the balance. But, at first reading, we have to wonder if more damage has not been done over the long term for a short-term fix.
In the meantime, "St. Peter don’t you call me ‘cause I can’t go, I owe my soul to the company store."