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Tax Gambit
Author: Raine    Date: 07/26/2012 13:57:11

Senate Dems were able to pass a tax package yesterday. It's going to be interesting to see what happens now that it goes to the House. In an unusual move, this bill originated in the Senate. TPM states:
Wednesday’s development places the onus of avoiding the full expiration of the Bush tax cuts on House Republicans. They are expected to pass legislation next week to extend all of the Bush tax cuts — but the Senate has already rejected that proposition. That leaves the Senate Democrats’ bill as the only viable vehicle for preventing everyone’s taxes from increasing next year.

Republicans will object to House adoption of the Senate bill on technical grounds. It faces what’s known as a blue-slip problem, because the Constitution requires revenue-raising measures to originate in the House of Representatives. But the blue-slip problem is only an obstacle if House Republicans insist on making it one — and Democrats are confident voters will be receptive to the argument that the GOP is standing in the way of middle-income tax cuts until wealthy Americans get a tax cut too.
How did this happen at all? Mitch McConnell got the ball rolling.
"We owe it to the American people to let them know whether we actually think it is a good idea to double down on the failed economic policies of the past few years or whether we support a new approach," McConnell said before the vote. "By setting these votes at a 50-vote threshold, nobody on the other side can hide behind a procedural vote while leaving their views on the actual bill itself a mystery."
So after McConnnell made the opening bid, Reid agreed to a vote on both the Democratic and Republican bills so that all votes would be on record. Mitch McConnell called Senator Reid's bluff, and the leader showed his hand.
The Senate vote was by a rare simple majority, which Sen. Chuck Schumer (D-N.Y.) said McConnell allowed because it was the only way he would get a vote on the GOP plan, and his caucus didn't want to be stuck only voting "no" on the Democratic plan.

Schumer suggested the political reality of needing to back the middle class would prompt action by House Speaker John Boehner (R-Ohio).

"I am sure that Speaker Boehner does not appreciate the uncomfortable position that Sen. McConnell has put him in," Schumer said. "The speaker knows that if he puts this bill on the floor, his members will have trouble voting against it."

Schumer argued that Congress has already passed two revenue bills that started in the Senate -- the recent highway and Federal Aviation Administration bills.
So there it is. The Senate rejected the GOP Tax Plan and passed the Democratic plan. The GOP plan 'would have extended all of the Bush tax cuts — including those on income in excess of $250,000 — while eliminating tax credits that benefit 20 million working families.' Contrast to the Democratic Plan which largely mirrors what the President has been proposing:
Under the Democratic measure, individuals earning over $200,000 and couples making at least $250,000 would see their top rates on those earnings rise from 33 percent and 35 percent today to 36 percent and 39.6 percent in January.

That increase would affect 2.5 million households, or 2 percent of all 140.5 million tax returns, according to 2009 Internal Revenue Service statistics.

The White House said that if the tax cuts were not continued, middle class families would face average tax increases next year of $1,600. It also said that the GOP bill would grant tax reductions averaging $160,000 to households where income exceeds $1 million annually.

The Democratic bill would also boost the top tax rate paid by people who inherit estates to 55 percent, exempting the first $1 million in an estate’s value. The GOP measure would maintain today’s 35 percent top rate and would not tax the first $5.12 million of an estate’s value.(snip)

In fresh figures released this week by Republicans, Congress’ nonpartisan Joint Committee on Taxation estimated that the Democratic provision would affect 55,200 estates next year, compared with 3,600 who would face estate taxes under the GOP plan.

Democrats would impose top tax rates next year of 20 percent on dividends and capital gains, two sources of income enjoyed disproportionately by the wealthy. The GOP top rate would be 15 percent.

The GOP bill ignores some tax credits for low- and middle-income families that Democrats want to extend for college costs; for some low-income couples and large working families; and for families with children.
Can you see a clear difference between these two plans here? Keep in mind that tax rates will go up for every dollar AFTER that $250,000 is earned. The bill that passed in the Senate is a reasonable bill. It is asking the wealthiest among us to help shoulder some of the burden that the lower 98% of Americans are carrying. The Republican bill is desperately trying to protect the wealthiest among us. It's clear cut.

Now the ball is in John Boehner's court. As TPM stated: "That leaves the Senate Democrats’ bill as the only viable vehicle for preventing everyone’s taxes from increasing next year." They are in a bit of a pinch right now. If they don't bring the bill to the floor, everyone's taxes will go up. If they do bring it for a vote, and it doesn't pass -- they are literally going to be framed as raising taxes on the middle class. One would think the GOP would come to it's senses-- only time will tell. The longer they dig their heals in, it appears to wiser people that they are coming to their protection of the wealthy. People are starting to wake up.

"The only place there is no agreement is with Republicans in Congress." -- Senate Majority Leader, Harry Reid. President Obama released a statement:
"The last thing a typical middle-class family can afford is a $2,200 tax hike at the beginning of next year. It’s time for House Republicans to drop their demand for another $1 trillion giveaway to the wealthiest Americans and give our families and small businesses the financial security and certainty that they need. Our economy isn’t built from the top-down, it’s built from a strong and growing middle class, and that’s who we should be fighting for."



The clock is ticking, now.

and
Raine
 

56 comments (Latest Comment: 07/27/2012 02:07:42 by livingonli)
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