Economy & Budget

Senate Democrats pass Obama tax plan

Senate Democrats pass Obama tax plan

Senate Democrats succeeded in extending portions of the Bush tax cuts by a simple majority vote of 51 yeas to 48 nays.  The bill, which was passed mostly along party lines, is expected to fail in the Republican-led House.

The Senate Democrats’ plan follows a policy outlined by President Obama to extend the Bush-era tax cuts, but only to middle-class Americans. Under the plan, the so-called “wealthiest Americans,” those making a yearly individual income over $200,000 or couples with an income above $250,000 will see their taxes increase 36 and 39.6 percent from the current 33 and 35 percent respectively over the next year.

Senate Republicans continued to call for an across the board extension to the Bush tax cuts, with their own McConnell-Hatch amendment, however, failing by a vote of 45 yeas to 54 nays, and accused the president of using the tax debate to build a plank for a campaign platform, class warfare. On the issue, Senate Minority Leader Mitch McConnell (R-Ky.) said, “His latest proposal on taxes has more to do with helping his campaign than in reviving the economy.”

However, in order to garner enough support among their caucus, fearful of a voting misstep in an election year, Senate Democratic leaders had to strike a key provision of the president’s plan, an increase in the estate tax, which Republicans call the “death tax.” McConnell quipped in a statement that “Instead of voting on the President’s plan, Democrats have cobbled together the only thing they can come up with that would muster more than 50 votes — a purely political exercise, and a total waste of time.”

Democrats, however, argued that the Republicans are the ones playing politics by pandering to those richest Americans, 2 percent of all earners. Sen. Chuck Schumer (D-N.Y.), echoing a similar statement by President Obama, said “They care about reducing taxes to the highest-income earners in America,” and that Republicans were “willing to hold middle-class tax cuts hostage” to get their way.

Sen. Reid, speaking on the floor, took it a step further accusing the Republicans of stonewalling, saying that “this legislation is about the debt, we have to do something about the debt and we’ve tried mightily to do that, we’ve tried mightily,” but, Republicans have decided “the most important thing we can do is defeat President Obama for reelection.”

Sen. John Thune (R-S.D.), Chairman of the Senate Republican Conference, disagreed with Reid’s assertion as to Republican motivations for opposing the tax bill, voicing concerns about the impact the cut down bill would have on everyday Americans, saying in a statement, “Under Reid’s legislation, the death tax would hit 24 times more farms and 13 times more small businesses.”

If a bipartisan agreement isn’t reached before Congress leaves for the year, automatic tax increases and spending cuts will go into effect as early as January 1, 2013, which would see a return to pre-Bush levels on income, payroll, capital gains, and an estate tax of 55 percent for estates worth $1 million and up.

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