Big fight ahead to keep Bush tax cuts

After spending the entire 2008 campaign railing against "tax cuts for the rich," Democrats are taking a second look at expiring Bush tax cuts and may see that the political and economic cost of allowing them to disappear on January 1, 2011 is too great to bear.

New York Times:


Democratic leaders, including Mr. Obama, say they are intent on letting the tax cuts for the wealthy expire as scheduled at the end of this year. But they have pledged to continue the lower tax rates for individuals earning less than $200,000 and families earning less than $250,000 - what Democrats call the middle class.Most Republicans want to extend the tax cuts for everyone, and some Democrats agree, saying it would be unwise to raise taxes on anyone while the economy remains weak. If no action is taken, taxes on income, dividends, capital gains and estates would all rise.

It isn't just the tax rates that are important; included in the package were cuts in dividend taxes - the raising of which would cut into millions of middle class retirement accounts. There's the reinstitution of the death tax, the marriage penalty, and other tax increases that would fall on those whose rates may not go up, but who will end up paying thousands of dollars a year more in taxes anyway.

Senate Budget chair Kent Conrad has recently made noises about keeping the tax cuts intact - at least temporarily. He is supported by a couple of other senate Democrats and a few on the House side as well. While by no means a certainty, keeping the Bush tax cuts intact appears to have a far better chance at this point than it did earlier in the year.

And it may be a potent issue for Republicans in the fall if the Democrats decide to allow the cuts to expire.





After spending the entire 2008 campaign railing against "tax cuts for the rich," Democrats are taking a second look at expiring Bush tax cuts and may see that the political and economic cost of allowing them to disappear on January 1, 2011 is too great to bear.

New York Times:


Democratic leaders, including Mr. Obama, say they are intent on letting the tax cuts for the wealthy expire as scheduled at the end of this year. But they have pledged to continue the lower tax rates for individuals earning less than $200,000 and families earning less than $250,000 - what Democrats call the middle class.

Most Republicans want to extend the tax cuts for everyone, and some Democrats agree, saying it would be unwise to raise taxes on anyone while the economy remains weak. If no action is taken, taxes on income, dividends, capital gains and estates would all rise.

It isn't just the tax rates that are important; included in the package were cuts in dividend taxes - the raising of which would cut into millions of middle class retirement accounts. There's the reinstitution of the death tax, the marriage penalty, and other tax increases that would fall on those whose rates may not go up, but who will end up paying thousands of dollars a year more in taxes anyway.

Senate Budget chair Kent Conrad has recently made noises about keeping the tax cuts intact - at least temporarily. He is supported by a couple of other senate Democrats and a few on the House side as well. While by no means a certainty, keeping the Bush tax cuts intact appears to have a far better chance at this point than it did earlier in the year.

And it may be a potent issue for Republicans in the fall if the Democrats decide to allow the cuts to expire.





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