Rockefeller touts tax relief for state residents
CHARLESTON, W.Va. - Despite allowing an increase in the federal payroll tax, this week's fiscal cliff deal keeps tens of thousands of West Virginians from seeing tax increases they might otherwise have faced.
The state's three Democrats in Congress are touting the deal, which wards off thousands of dollars in tax hikes for some families. The state's two Republican U.S. House members voted against the deal because, they argued, a last-minute deal did too little to reign in government spending.
Sen. Jay Rockefeller, D-W.Va., in particular has sought to make clear the tax increases that were avoided.
"I realize that reports on the bill have been confusing," Rockefeller said in a statement.
That's because the bill is a weird combination of tax increases for wealthy Americans and tax cuts for middle class Americans - and a tax increase for everyone with a job. Some lawmakers, including Sen. Joe Manchin, D-W.Va., have at times portrayed the deal as entirely sparing the middle class from tax increases.
But the payroll tax will increase by 2 percentage points. It had been 6.2 percent for many years when it was reduced to 4.2 percent two years ago in an attempt to stimulate the economy after the deep recession.
But Rockefeller - and other Democrats and the dozens of Republicans who voted for the bill in the House - can correctly claim the bill sheltered the middle class from other higher taxes that would have cost thousands of dollars.
Rep. Shelley Moore Capito, R-W.Va., voted "no" on the deal but argued a deal would have happened some way or another. In Capito's view, a failed deal in the House would have prompted the Senate to come back and engage in further negotiations that could have given the Republicans some of the spending cuts they wanted.
Comparing what happened because of this week's deal to what would have happened without a deal, Rockefeller argues, "even without the payroll tax cut, the facts are very clear - this bill significantly benefits West Virginians and the net total puts more money in West Virginians' pockets."
All the positioning is particularly delicate because the 2014 election is already under way. Capito said last month she would run for Rockefeller's Senate seat in two years, though campaigns always begin long before the ads. Rockefeller's own intentions remain unclear.
Rockefeller and his office sought to draw attention to the taxes that did not go up because of this week's deal, which was passed with bipartisan support in the Senate and in the House.
To Rockefeller, the most important measures were extensions of tax credits for low- and middle-income families and families with children and college students. Those measures spared some families thousands of dollars in tax increases. That's compared to the hundreds of dollars middle class families stand to lose because of the payroll tax increase.
For instance, this week's deal extends the Earned Income Tax Credit, which gives tax breaks to low- and moderate-income working individuals with few investments. According to Rockefeller, about 160,000 state taxpayers receive $2,000 a year in tax relief because of this credit.
The deal keeps in place the Expanded Child Tax Credit, which helped 100,000 West Virginians, according to Rockefeller.
Nationally, the biggest ticket item - which spared tax increases for some 25 million taxpayers - is a permanent "patch" of the Alternative Minimum Tax. The tax was designed to make sure high-income taxpayers pay at least a certain percentage of their income in taxes.
But the tax was never adjusted for inflation. That meant more and more people were facing the Alternative Minimum Tax, which is higher than regular taxes. To avoid making the middle class pay the higher tax, Congress has repeatedly and for more than a decade created an annual "patch" to spare millions of taxpayers from paying the tax.
Nationally, the change will cost the country's coffers about $1.8 trillion over the next decade, even as it spares some upper-middle class families higher taxes.
According to Rockefeller's office, about 10,121 West Virginians paid the alternative tax in 2010 but 50,000 would have without the "patch."
The deal also extends federal unemployment benefits for thousands of West Virginians and provides a number of tax credits, including two for coal companies to invest in safety measures and one to help build schools.
Rockefeller, Manchin and Rep. Nick Rahall, all D-W.Va., voted for the fiscal cliff deal this week. Rep. David McKinley and Capito, both R-W.Va., voted against it.