A massive tax package that would save millions of Americans thousands of dollars in higher taxes is headed for a vote in the House Thursday even as rebellious Democrats complain it is too generous to the wealthy.
The Senate overwhelmingly passed the package Wednesday, with broad bipartisan support. Now, Obama is urging the House to pass it without changes, so he can sign it into law.
“I know that not every member of Congress likes every piece of this bill, and it includes some provisions that I oppose,” Obama said. “But as a whole, this package will grow our economy, create jobs, and help middle class families across the country.
“As this bill moves to the House of Representatives, I hope that members from both parties can come together in a spirit of common purpose to protect American families and our economy as a whole by passing this essential economic package,” Obama said.
The stakes are high as the House begins debate. If the House passes the higher estate tax, the bill would go back to the Senate, jeopardizing the entire package and representing a public rebuke of Obama by members of his own party.
A vote is expected Thursday afternoon.
Many House Democrats, even critics of the bill, are resigned to it ultimately passing with the lower estate tax, especially after the Senate passed it, 81-19.
“The overwhelming vote in the Senate should bring everyone to religion,” said Rep. Bill Pascrell Jr., D-N.J. But, he added, “Let’s have a tangible signal that we really feel that this is unreasonable, what we’re doing in terms of the estate tax.”
Tax cuts affecting Americans at every income level are scheduled to expire Jan. 1 — a little more than two weeks away. The package would extend them for two years.
The tax cuts includes a more generous child tax credit, tax breaks for college students, lower taxes on capital gains and dividends and a series of business tax breaks designed to encourage investment. The package would also renew a program of jobless benefits for the long-term unemployed and enact a one-year cut in Social Security taxes.
A worker making $50,000 in wages would save $1,000 under the cut in Social Security taxes. A worker making $100,000 would save $2,000.
The bill’s cost, $858 billion, would be added to the deficit.
“The president has been clear from the beginning that there are provisions in this bill he does not support,” Treasury Secretary Timothy Geithner said. “But they were necessary compromises in order to secure the president’s top priorities — initiatives targeted to strengthen growth, create jobs and help working and middle-class families.
At the insistence of Republicans, the plan includes an estate tax that would allow the first $10 million of a couple’s estate to pass to heirs without taxation. The balance would be subject to a 35 percent tax rate.
Many House Democrats want to impose a higher estate tax, bringing back the levels in place in 2009. They persuaded House Speaker Nancy Pelosi, D-Calif., to allow a vote on the change, arguing that the higher estate tax would affect only 6,600 of the wealthiest estates, and would save $23 billion.
“It doesn’t create jobs, it adds to the deficit,” Rep. Chris Van Hollen, D-Md., said of the more generous estate tax. “Is that the message this Congress wants to send at a time of high deficits?”
In 2009, individuals could pass $3.5 million to their heirs, tax-free. Couples could pass $7 million, with a little tax planning, and the balance was taxed at a top rate of 45 percent.
The estate tax was allowed to expire for 2010. But under current law, it would come back in 2011 at even higher levels, with a top tax rate of 55 percent. Democrats said their plan to reinstate the 2009 tax is still more generous than current law; many Republicans said the estate tax should be done away with altogether.
“I don’t like this bill, but I like even less the notion of raising taxes on average Americans,” said Rep. David Dreier, R-Calif.
Rep. Mike Pence, R-Ill., said Thursday that he won’t vote for the bill because it doesn’t make the tax cuts permanent.
“A two-year extension of the tax code is not going to encourage the kind of investment that’s going to begin to create jobs in this economy,” Pence said on NBC’s “Today.”
Senate GOP Leader Mitch McConnell said any changes to the bill would derail the entire package, putting millions of Americans at risk of a significant tax increase next year.
“Now it’s up to our colleagues in the House, and we urge Democrat leaders to resist playing political games and making partisan changes so that American taxpayers won’t be hit with a huge, job-killing tax hike on Jan. 1,” McConnell said.
Copyright © 2010 The Associated Press