House votes to extend tax cuts at all income levels


(Seth Perlman/AP)

The Republican-led House voted Wednesday to extend an array of expiring tax cuts for households at all income levels through 2013, a pre-election statement of unyielding opposition to higher taxes for any American.

The 256 to 171 vote to preserve tax cuts enacted during the George W. Bush administration fell largely along party lines. It came after the House rejected a Democratic alternative, on a similarly partisan 257 to 170 vote, that would have allowed the cuts to expire on taxable income over $200,000 for individuals and $250,000 for couples filing jointly.

Nineteen Democrats joined Republicans in voting to extend the cuts for all income levels; one Republican — retiring Rep. Timothy V. Johnson (Ill.) — was opposed.

The House action stands in contrast to a move last week by the Democratic-controlled Senate to extend tax cuts only up to the $200,000 and $250,000 ceilings. Unless a compromise emerges, all the Bush tax cuts are set to expire in January, forming the biggest part of the “fiscal cliff” of nearly $600 billion in scheduled tax increases and spending cuts that economists say threatens to throw the nation back into recession.

Early Wednesday, leaders of the Senate Finance Committee announced a tentative agreement to begin whittling down the cliff and limit the potential economic fallout of a stalemate. The deal would prevent the alternative minimum tax from striking millions of additional taxpayers at tax time next April. The expansion of the AMT would suck about $100 billion out of the economy next year, according to the nonpartisan Joint Committee on Taxation.

The package would also extend or revive nearly 50 other tax breaks for businesses and individuals, including a credit for conducting research and development in the United States and a deduction for sales taxes in states such as Texas and Florida that do not impose an income tax.

“Bit by bit, we are turning the fiscal cliff into more of a slope,” said Sen. Charles E. Schumer (D-N.Y.), a Finance Committee member. “First, we ensured that the federal government’s operations will continue uninterrupted into next March. Now, we’re moving towards taking the AMT threat off the table.”

For now, senators have agreed to drop some other provisions, such as a special tax break for NASCAR tracks and a tax credit for wind power that is opposed by GOP presidential candidate Mitt Romney but supported by President Obama. Both provisions are likely to be restored, however, when the bill is put to a vote in committee as soon as Thursday.

That would increase a cost that already approaches $152 billion over a decade. Sen. Tom Coburn (R-Okla.) moved Wednesday to block a vote on the package, which he condemned as “spending through the tax code.” Even if the package makes it to the Senate floor, it faces an uncertain reception in the House, where leaders are conducting their own review of the expiring tax provisions.

“The goal has always been to have a package after the election,” said Rep. Patrick Tiberi (R-Ohio), a leader on the House Ways and Means Committee.

Until then, party leaders are more focused on differences in their tax visions than on the potential for compromise. Obama has said he would veto any attempt to extend tax cuts for the wealthy.

House Republicans argue that the current tax rates — extended in late 2010 — should be continued for another year to give lawmakers time to overhaul the tax code and push rates lower still. On Thursday, the House is scheduled to vote on a bill that would lay down principles for a tax reform effort. Raising taxes on anyone in the meantime is a bad idea, they said.

“The choice is clear: You either want growth or you want more taxes,” said House Majority Leader Eric Cantor (R-Va.). “You either want to endow the folks who earn the money with the right to keep that money and grow this economy or you want to tax those people more and let Washington decide how it’s going to allocate that money.”

Democrats say that the wealthy should pay at the rate they did during the Clinton administration to help reduce the deficit and that Republicans are holding hostage tax relief for the middle class — 98 percent of taxpayers — to keep taxes low for top earners.

“Under the Republican plan, they have chosen millionaires over the middle class — a $160,000 tax cut for those wealthier Americans as compared to the $2,200 cut that we have proposed for middle-class Americans,” said House Minority Whip Steny H. Hoyer (Md.).

Rosalind Helderman is a political enterprise and investigations reporter for the Washington Post.
Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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