SHOWDOWN ON TAX CUTS, UNEMPLOYMENT EXTENSIONS LOOMS IN CONGRESS

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Local representatives weigh in with their views

 

By Miriam Raftery

December 6, 2010 (Washington D.C.) – Congress is under fire to take action before Bush-era tax cuts expire at year’s end. Republicans want to see all tax extended, but have opposed extending unemployment benefits, which also expire this month. Democrats wanted to extend tax cuts for the middle class but eliminate tax cuts for the wealthy in order to reduce the deficit, and also extend benefits for the unemployed.  But Democrats could not pass their plan due to opposition from Republicans, who contend the wealthy need tax cuts to create jobs.

 

Now, President Barack Obama is pushing a compromise measure that would include a mix of new tax cuts, including a payroll tax cut and individual tax breaks, while also restoring some estate tax revenues.  

 

The President’s plan would extend the Bush-era tax cuts for everyone, including the wealthy and the middle class, keeping income taxes at current levels for two years. It would also allow extended federal unemployment benefits for 13 months in most areas, and up to 99 weeks (or nearly two years) in staets where job loss has been extremely high.
 

In addition, Obama’s proposal would restore estate taxes (which expired last year) on estates valued at $5 million or more, with a top rate of 35%. The President’s plan also calls for lowering payroll taxes from 6.2% to 4.2%. A worker earning $50,000 a year would save $1,000 in Social Security contributions next year, while someone earning $100,000 would save $2,000, CNN reports.
 

In addition, the President proposes extending individual tax breaks for low and middle-income taxpayers, parents and working families, including the Earned Income Tax Credit that helps families climb out of poverty; the Child Tax Credit that makes sure families don’t see their taxes jump up to $1,000 for every child; and the American Opportunity Tax Credit that ensures over 8 million students and their families don’t suddenly see the cost of college shooting up, according to the White House.
 

Some liberal Democrats have criticized the President for compromising with Republicans on tax cuts for the wealthy rather than allow tax cuts for everyone to expire. Vice President Joe Biden defended the decision, but hammered Republicans, saying,”We’ve got to extend the tax cuts for the middle class that are set to expire at the end of the month.” Biden said allowing unemployment benefits to lapse for two million Americans during the worst recession in decades would be harmful to the economy and could cost hundreds of thousands more jobs.
 

“That’s no message to send in the season of hope,” the Vice President said. “We all know someone who hit a rough patch. When that happens in America, we help him get back up on his feet. That’s who we are. That’s the American way. So I just don’t agree with the folks who’ve said we can’t afford a lifeline for Americans who lost their jobs during the worst recession in generations, but we can afford to borrow hundreds of billions of dollars to extend tax cuts for the wealthiest two percent of Americans. That’s bad economic policy, and it’s simply wrong.”
 

Republicans argue that tax cuts for the wealthy are needed because the wealthy create jobs.

Congressman Duncan D. Hunter (R-El Cajon) , in an e-mail to constituents, says a national jobless rate above 9.5% for the past 16 months “demonstrates the obvious need for a new approach.” Hunter voted against extending unemployment benefits. Instead, he says economic recovery must focus instead on two key points: “empowering local job creators and cutting spending over time to reassure taxpayers and busineses that tax rates will not increase in the future.”

 

Hunter opposes eliminating Bush tax cuts. He added that incoming Repubilcans, who will become the majority party in the House of Representatives in January, plan to require that spending bills be voted upon individually instead of in large omnibus packages. Hunter offered praise to the President for one action: freezing federal pay for all non-military employees.
 

Congressman Bob Filner (D-San Diego) disagrees. In a letter to a constituent published on his website, Filner said he supports repealing Bush tax cuts only for the wealthy, while keeping them for the middle class. “This would mean no tax change for 98% of American families and at least 97% of small businesses,” Filner said. “And for the wealthiest 2% of Americans with an average income of $800,000 per year, the top marginal tax rate would return to the level at the end of the 1990s, a time of remarkable job growth and economic strength.”

Senator Barbara Boxer (D-California) blasted Senate Republicans for blocking that plan. “Unfortunately Senate Repubilcans showed they care more about giving tax breaks to the 315,000 highest earners who bring in more than $1 million a year than providing the tax relief to more than 150 million middle-class Americans who deserve to have the Senate on their side,” she said in a press statement issued December 4.
 

But Congressman Darrell Issa (R-San Diego) claimed Congressional Democrats “just don’t get it….The American people had a clear choice between those that want to cut taxes for all Americans and those that want to raise them and they chose decisively,” he said of the November elections.
 

Congresswoman Susan Davis (D-California) has a poll posted on her website asking voters what they think Congress should do about the expiration of the Bush tax cuts at year’s end. The results showed a divided electorate: 41% said all tax cuts should be left in place, 32.2% said Congress should let all tax cuts expire, 24.7% said Congress should keep some tax cuts and let others expire, while just 2.1% said they were not sure.
 

The Presisdent said of the compromise measure proposed, "have no doubt that everyone will find something in this compromise that they don’t like. In fact, there are things in here that I don’t like -- namely the extension of the tax cuts for the wealthiest Americans and the wealthiest estates. But these tax cuts will expire in two years. ..It’s not perfect, but this compromise is an essential step on the road to recovery. It will stop middle-class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs."


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