SummaryExtends the Bush tax cuts for millionaires and billionaires through the end of 2013.
Details & Argument
This bill would extend through the end of 2013 the tax rates set by the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, commonly referred to as the "Bush tax cuts," regardless of income.
House Democrats sought to amend this bill by limiting the tax cuts to the first $200,000 of income for individuals and $250,000 for married couples filing jointly. The amendment is the same as legislation passed by the Senate.
Rep. Dave Camp, R-Mich., the sponsor of the bill, said on the House floor, "The choice Republicans have made is to pass this bill, work toward comprehensive tax reform, and create jobs. In contrast, my Democrat colleagues have proposed raising taxes. They claim the tax hike will only affect the rich. What they don't want to tell you is that, in reality, this tax hike will hit nearly 1 million small businesses and 53 percent of small business income. A study conducted by Ernst & Young concluded that the Democrat tax hike could lead to the loss of over 700,000 jobs. That is the choice the Democrats have made'to raise taxes on families and small businesses and to destroy jobs."
Rep. Sander M. Levin, D-Mich., in opposition to the bill, said, "The Senate bill continues all of the tax cuts for every American household on their first $250,000 of income; 114 million families would see their tax cuts extended in full; 97 percent of small businesses would keep all of their tax cuts, according to the Joint Taxation Committee. Why don't the Republicans join us in acting? I think the answer is clear. ... Their priority is cutting taxes for the very wealthy. They want to give households that earn more than $1 million a year a tax cut on average of $160,000. ... What makes it worse, if possible, is it would add $49 billion to the deficit. ...This talk about 700,000 jobs being lost, that study was financed by special interest friends, and it's been discredited by every fact checker. .. This is about whether the first priority of the Republicans is protecting the very wealthy, holding hostage middle-income families."
The legislation passed the House, 256-171, with 237 Republicans and 19 Democrats voted in favor and one Republican and 170 Democrats voting in opposition. One Republican and two Democrats did not vote.
Prior to that final vote, the amendment that would have limited the continuation of the Bush tax cuts to the first $250,000 of income for couples and $200,000 for individuals failed, 170-257, with 170 Democrats voting in favor and 238 Republicans and 19 Democrats voting in opposition. One Republican and two Democrats did not vote.
The Middle-Class Position
The middle-class position is to oppose this bill. Extending the Bush tax cuts for the top 2 percent of taxpayers not only helps worsen the deficit and force cuts in vital services, it also perpetuates extreme economic inequity and exempts the wealthiest Americans from doing their fair share to repair the damage done by the economic crash. The revenues from allowing the tax cuts on the wealthiest Americans to expire, if invested in rebuilding our infrastructure or sustaining teachers and police on the jobs, would produce far more jobs and economic boost than sustaining the tax cuts.
According to the Economic Policy Institute, the top 1 percent of wage earners have received 38 percent of the tax savings from the Bush tax cuts, while the bottom 60 percent of wage earners – people making less than $68,000 a year – received less than 20 percent of the savings. In 2013, this legislation would mean an average of $25,000 more in the pockets of people in the top 1 percent of the income scale than they would have if the tax rates went back to pre-Bush levels. For those on the top 0.1 percent – people earning $2.5 million or more – that would mean on average an extra $140,516 cut from their tax bill.
The conservative argument is that these tax savings by the wealthiest Americans would be plowed into investments that produce jobs for Americans. But that has proven not to be true since the cuts were put in place. "The economic impact of cutting capital gains rates and lowering the top marginal tax rates never materialized for working families. Inflation-adjusted median weekly earnings fell by 2.3 percent during the 2002-07 economic expansion, which holds the distinction for being the worst economic expansion since World War II," EPI economist Andrew Fieldhouse wrote.
What would benefit working families is a concerted effort to build the foundations of a new economy, with investments in infrastructure, schools, job training, research and development, and strategic support for the industries of the future. And we can't afford to keep eroding the economic supports struggling households need to stay on their feet while the economy recovers. That requires a tax code in which everyone pays their fair share, in accordance with their means. With the richest 1 percent capturing a staggering 93 percent of the nation's income growth, it is bizarre to keep extending tax cuts that are ineffective in creating jobs and only add to inequality.