Congress Debates Letting Taxes Rise for the Rich
I have already seen a few emails and advisories going around, blaring that “Democrats are planning massive tax hikes for Jan. 1!” The Chamber of Commerce, for one, made the case yesterday. But it’s not really true. The Bush-era tax cuts are due to expire on Jan. 1. If Congress lets them expire, taxes will go up for most Americans. But the Obama administration and Democrats plan on keeping some, if not all, of the cuts.
Obama has vowed to retain cuts for the middle-class — meaning individuals making less than $200,000 a year and families making less than $250,000. And Congress is now formally debating which cuts to allow to expire, given concern over the nation’s large annual deficit and massive national debt, and which cuts to keep.
Yesterday, the Senate Finance Committee started hearings on the matter, now the subject of serious debate among Democrats. The House is considering extending the middle-class cuts for a year before phase-out, and continuing the patch on the Alternative Minimum Tax (AMT) for two years. The Senate is considering similar provisions.
At the Finance Committee hearing, Sen. Max Baucus (D-Mont.) said, “The big questions before us now are whether we should make some of these tax cuts permanent. And if so, which ones? But that’s not the only challenge. There’s another elephant in the room — the budget deficit. And, that elephant is growing. Last year, the budget deficit was the largest share of the economy since World War II.” He told lawmakers to note that “with today’s budget picture, it’s no longer clear that we can afford large tax cuts for the most well-to-do.”
Only around five million tax filers, out of more than 140 million working Americans, make enough to be hit by possible tax increases for next year.