Tax policy has taken center stage in Congress, with two important votes in the Senate last week and two more expected in the House this week. The members of each body are voting on a pair of bills that present stark differences.
Senate Majority Leader Harry Reid offered a bill that would have ended the Bush tax cuts on income over $200,000 for individuals and $250,000 for couples (the 2% of taxpayers above this income level would continue to benefit from the Bush tax cuts’ lower rates on the first $200,000/$250,000 of their income). Reid’s bill also extended the 2009 improvements to refundable tax cuts for the working poor.
Senator Hatch offered a bill that would have fully extended the Bush tax cuts and ended the 2009 improvements to the refundable tax cuts for the working poor.
How the Hatch bill’s elimination of the 2009 improvements to the refundable tax cuts for the working poor squares with his pledge (and that of 39 other Senators who voted for his bill) to Grover Norquist not to raise taxes on anyone, ever, is unclear. Perhaps a footnote excluded taxes on the working poor from that pledge.
Senator Reid’s bill carried by a vote of 51-48; all Republicans voted against the bill and all Democrats but one voted in favor. Senator Hatch’s bill went down to defeat 54-45.
This week we’ll see more of the same in the House, which will vote on proposals very similar to the Reid and Hatch bills. Expect opposite results.
Extending the Bush tax cuts on income over $200,000 for individuals and $250,000 for couples would reduce the average millionaire’s taxes by $140,000.
Congressman Ryan’s even more costly budget plan, besides extending all of the Bush tax cuts, would add four new tax breaks that are heavily skewed to the wealthy, with 39% of the new tax breaks going to millionaires. Under Ryan’s plan, the average millionaire would pay $400,000 less in taxes, for a 12.5% increase in after-tax income. Meanwhile, Ryan’s elimination of the 2009 improvements to the refundable tax cuts for the working poor would cause the after-tax income to fall for Americans with income below $30,000.
These persistent efforts to give massive tax breaks to the wealthiest people in our society conflict with public opinion on tax policy. Americans think that making the tax system fairer is the most important goal for reforming our tax system; according to a recent poll conducted by Hart Research Associates for Americans for Tax Fairness, Americans believe, by a two-to-one margin, that we should raise income taxes on the richest 2% of households.
Hence, those who continually seek any opportunity to cut taxes at the top of the income scale are fundamentally out of step with the prevailing majority opinion that the wealthy should pay more in taxes, not less.