PAX Centurion - January / February 2013

Page 34 • PAX CENTURION • January/February 2013 617-989-BPPA (2772) NATIONALASSOCIATIONOF POLICEORGANIZATIONS News from Capitol Hill 2012 Year-End NAPO Washington Report SEQUESTRATION The term “fiscal cliff” is Wash- ington shorthand for a series of automatic spending cuts and tax in- creases set to take effect in January. If enacted, theywould amount to the largest spurt of deficit reduction in more than 40 years but could also push the country back into a reces- sion. The cuts include about $100 billion in automatic cuts to defense anddomestic government spending. The plan also includes about $400 billion in tax hikes, caused primar- ily by the expiration of a temporary payroll tax cut and other income tax breaks adopted during the George W. Bush administration. In addi- tion, more than 26 million house- holds will for the first time face the alternative minimum tax, which threatens to tack$3,700, on average, A s 2012 comes to an end, there are several issues commanding attention in Washington that will have a large impact on state and local law enforcement. We’d like to discuss three of them here: Sequestration (or “The Fiscal Cliff”); The White House summit on gun violence, and expected changes in the new, 2013-15 Congress. onto taxpayers’ bills for the current tax year. Leaders from both parties say they are determined to head off the fiscal cliff. But someDemocrats and policy analysts have suggested it might be better to actually go over the cliff. Once the tax hikes have kicked in, these “cliff divers” argue, Republicanswould be hard-pressed to roll themall back andwould have to accept a deal on taming the deficit that contains more new tax revenue than GOP lawmakers want. In exchange for raising the country’s debt limit, President Obama and congressional leaders agreed to create a congressional supercommittee to establish a deficit reduction plan. But when the supercommittee failed to come to an agreement, the plan, which was codified in the 2011Budget Control Act (BCA), called for a package of automatic spending cuts. This pack- age is known as sequestration. The cuts, which are projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. Analysts have said that going over the fiscal cliff could derail the economy’s fragile recovery. The nonpartisan Congressional Budget Office predicts that a recession would be significant but brief, with unemployment peaking around 9 percent and economic growth recovering during the second half of 2013. The International Mon- etary Fund has estimated that the automatic spending cuts and tax increaseswould knock perhaps four percentage points of growth off of a U.S. economy that is already only experiencing slow growth. The alternative minimum tax is an obscure provision of the tax code that could become alarmingly relevant to millions of middle-class C arole l und r.e. G ail d e C oste Real Estate Agent Gail.carolelund@gmail.com Office: (781) 769-0122 Cell: (617) 407-9217 Fax: (781) 326-3776 taxpayers. In simple terms, it’s a flat tax with two brackets, 26 percent and 28 percent. Currently, the alternative minimum tax, or AMT, applies to about 5 million upper-middle-class families who havemany children or other deduct- ible expenses and live in high-cost states. But if the fiscal cliff is not averted, the AMT could affect an additional 26.4 million people in the 2012 taxyear. It threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. After the debt-ceiling battle in the summer of 2011, Congress raised the national debt limit to $16.394 trillion. But the country is expected to need to borrow more money starting in February. Many in Congress would like to see an agreement to raise the debt ceiling included in a fiscal cliff deal. [Credit: Washington Post, No- vember 4, 2012 and November 30 and December 1, 2012]