Democrats and Republicans in Congress remain split over tax policy leaving no easy path to avert looming tax hikes at year’s end.
A key House roll call last week saw a Republican-sponsored measure extending the Bush-era tax cuts on income, capital gains and dividends pass. But it did so on a mainly party-line vote.
The proposal is at odds with legislation backed by the Democratic-controlled Senate, so the parties still need to find common ground.
There’s a lot of money at stake. A middle class family of four could see taxes go up $2,200 on Jan. 1 if Congress fails to act, Democrats estimate.
New Hampshire Republican Congressmen Frank Guinta and Charlie Bass supported the tax plan that passed the House. Massachusetts Democratic Congressmen Nikki Tsongas and John Tierney were opposed.
Republicans said the plan would let Congress take up comprehensive tax reform next year after the election.
“By eliminating unnecessary loopholes and special interest deductions, we can lower tax rates for families and employers while broadening the tax base to ensure everyone pays their fair share,” Bass said.
In the meantime, the House plan would block scheduled tax increases by extending current income rates for one year. It also would maintain a $1,000 child tax deduction and continue marriage penalty relief.
Both sides agree across-the-board tax hikes would not be good now.
“This is an especially bad time to slap Granite State families and small businesses with a tax hike,” Guinta said. “The economic recovery remains weak and too many people remain unemployed or under employed.”
But Democrats remained wary of the Republic
an approach, seeing it benefitting those at the top incomes and not in the middle.
Tierney said it would add $1 trillion to the deficit over 10 years. He called it irresponsible and unacceptable.
“Speaker (John) Boehner should stop catering to the extreme right wing of his party and pass the common sense, compromise bill that the Senate approved,” Tierney said. “That proposal would extend tax cuts for all taxpayers on the first $250,000 of their income, regardless of overall wealth, while not extending additional special tax cuts for income exceeding that threshold.”
“The Republican majority refuses to support the Senate legislation because it wouldn’t enact an additional tax cut for income levels above $250,000 for the top 2 percent earners,” Tsongas said. “Republicans are holding the middle class tax cut hostage in order to give households with incomes over $1 million an average tax cut of $160,000.”
The National Taxpayers Union had urged passage of the Republican version.
“This legislation is not perfect, but it’s necessary to stop a catastrophe for consumers, employers, small business owners and our economy as a whole,” its “Stop the Tax Hike” petition to Congress said.
The Senate also was divided on party lines.
Sens. John Kerry, D-Mass., and Jeanne Shaheen, D-N.H., favored the Democrat plan that passed. Sens. Scott Brown, R-Mass., and Kelly Ayotte, R-N.H., dissented.
The lawmakers acknowledge they will need to come together.
“This ought to be a no-brainer but, instead, Congress is in gridlock once again,” Tsongas said.
“We must get past the political rhetoric of saying we can solve our nation’s problems with just raising taxes on one segment of our population
or suggesting that only more spending cuts are needed, which is both inaccurate and insincere,” Bass said.