Congress returned to Washington, DC this week to begin negotiating a plan to avert the so-called “Fiscal Cliff”—the package of automatic spending cuts and tax increases that will take effect on January 1.
President Obama, elected on a platform of requiring the wealthiest Americans to pay their fair share of taxes, has been meeting with congressional leaders from both parties, as well as business and labor leaders to generate support for this proposal to cut the deficit by $4 trillion. Meanwhile, Republican lawmakers continue to advocate for major changes to entitlement programs, including Social Security and Medicare, and have reaffirmed their opposition to raising tax rates on the high-income wage earners.
The IAFF is the thick of the scrum, fighting for proposals to protect fire fighters and their families. The IAFF’s top priority in the negotiations is opposing plans to tax fire fighters on the value of their employer-provided health benefits and pension contributions. Many Republicans, echoing the position of Mitt Romney’s presidential campaign, have indicated that they can support plans to generate more revenue but only if the revenue comes from limiting “tax expenditures,” such as the tax deductions for mortgage interest and state and local taxes, as well as the tax exclusions for employer-provided health and retirement benefits. Because fire fighters tend to receive a higher percentage of their total compensation in the form of tax-exempt benefits, eliminating these tax preferences would hit first responders especially hard. An analysis by the IAFF found that the typical fire fighter would pay thousands of dollars more each year in federal income taxes if health premiums and pension contributions were treated as taxable income.
The IAFF is fighting back against these proposals, working with our allies on both sides of the political aisle to preserve the tax-exempt status of health and retirement benefits. Key White House officials have assured the IAFF that they will stand firm in their opposition to tax hikes on fire fighters and other middle-income Americans.
Another issue on the IAFF agenda is preserving the Medicare eligibility age. A number of leading conservative organizations are advocating to raise the age from 65 to 67, making Medicare consistent with Social Security. While many working Americans could adjust to such a change simply by working two extra years, fire fighters do not enjoy that luxury. In many jurisdictions, fire fighters face mandatory retirement age limits or other policies designed to ensure that fire fighters retire earlier than most other workers. For these men and women, paying for health insurance for an extra two years would create a hardship. Moreover, many localities that currently provide retiree health care may be unable to afford the additional cost, and could move to drop their retiree coverage.
Other issues on table in these high-stakes negotiations include the Alternative Minimum Tax (AMT) which could cost middle-income taxpayers thousands of dollars each year, extending unemployment benefits for those workers laid off in Great Recession, and proposals to tax federal employees, including federal fire fighters, by increasing their pension contribution and cutting their retirement benefit.
If Congress is unable to reach agreement on a comprehensive deficit reduction plan, tax rates will automatically go up for almost all Americans, and automatic spending cuts will slash funding available for fire service programs. The stakes are high, and your IAFF is on the frontlines fighting for your interests.