Wednesday, August 1, 2012

House passes Republican tax-cut plan

The House passed a Republican-backed tax-cut extension that is unlikely to become law before November.
The House passed a Republican-backed tax-cut extension that is unlikely to become law before November.
  • The House measure extends the Bush tax cuts for everyone
  • House Republicans reject a Democratic version to extend most but not all tax cuts
  • The Senate did the opposite last week, passing the Democratic plan
  • No further action on possible tax reform is expected until after the November election

Washington (CNN) -- The U.S. House on Wednesday took the opposite action on tax cuts as the Senate, rejecting a Democratic proposal championed by President Barack Obama to extend lower tax rates for middle-income Americans, and then passing a Republican plan to maintain the lower rates for everyone for a year.

In separate votes that amounted to political posturing in an election year, House Republicans joined by more than a dozen Democrats passed the GOP measure by a 256-171 margin.

Minutes earlier, a similar tally defeated the Democratic alternative that would maintain the lower rates for income up to $250,000 for families and $200,000 for individuals for a year.

Wednesday's votes extended a congressional stalemate over the Bush tax cuts from 2001 and 2003 that has come to symbolize legislative inaction in Washington.

Last week, the Senate passed the Democratic version in a sharply polarized 51-48 vote, while the Republican plan was defeated 45-54.

Normally, a congressional conference committee would negotiate a compromise between the measures passed by each chamber, but the volatile tax issue has little chance of receiving further consideration before the November election.

Rep. Van Hollen on the Bush-era tax cuts
Panelists on the Bush-era tax cuts
Hayworth: We're trying to help Americans
Cummings: GOP holding tax cuts hostage

Republicans seeking to shrink the size of government oppose any higher taxes and argue the Democratic plan of allowing rates to increase on higher-income Americans will stunt economic growth.

GOP leaders say anything short of renewing all the current tax rates amounts to a massive tax increase on small businesses whose owners report their income through personal rather than corporate returns.

Democrats contend Republicans are holding hostage tax breaks for the middle class -- including 97% of small business owners -- in order to keep lower tax rates for 2% of American taxpayers earning in excess of the $250,000 threshold.

Both sides agree on extending the lower rates for middle-income Americans, Democrats argue, but they say Republicans are preventing that from happening out of allegiance to a dogmatic opposition to any kind of tax increase on even the wealthiest Americans.

Democrats also point to polling that shows a majority of Americans support their approach.

Wednesday's votes completed each party's opening bid in what is sure to be a frenzied legislative negotiating session after the November vote.

The economy is approaching a so-called "fiscal cliff" brought on by the looming expiration of several tax cuts as well as the approach of a series of mandatory spending cuts.

CNN's Alan Silverleib, Ted Barrett and Deirdre Walsh contributed to this report.