House passes Republican tax-cut plan

The House passed a Republican-backed tax-cut extension that is unlikely to become law before November.

Story highlights

  • The House measure extends the Bush tax cuts for everyone
  • House Republicans reject a Democratic version to extend most but not all tax cuts
  • The Senate did the opposite last week, passing the Democratic plan
  • No further action on possible tax reform is expected until after the November election

The U.S. House on Wednesday took the opposite action on tax cuts as the Senate, rejecting a Democratic proposal championed by President Barack Obama to extend lower tax rates for middle-income Americans, and then passing a Republican plan to maintain the lower rates for everyone for a year.

In separate votes that amounted to political posturing in an election year, House Republicans joined by more than a dozen Democrats passed the GOP measure by a 256-171 margin.

Minutes earlier, a similar tally defeated the Democratic alternative that would maintain the lower rates for income up to $250,000 for families and $200,000 for individuals for a year.

Wednesday's votes extended a congressional stalemate over the Bush tax cuts from 2001 and 2003 that has come to symbolize legislative inaction in Washington.

Why House tax vote is really about drawing battle lines for the fall

Last week, the Senate passed the Democratic version in a sharply polarized 51-48 vote, while the Republican plan was defeated 45-54.

Normally, a congressional conference committee would negotiate a compromise between the measures passed by each chamber, but the volatile tax issue has little chance of receiving further consideration before the November election.

Republicans seeking to shrink the size of government oppose any higher taxes and argue the Democratic plan of allowing rates to increase on higher-income Americans will stunt economic growth.

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GOP leaders say anything short of renewing all the current tax rates amounts to a massive tax increase on small businesses whose owners report their income through personal rather than corporate returns.

Democrats contend Republicans are holding hostage tax breaks for the middle class -- including 97% of small business owners -- in order to keep lower tax rates for 2% of American taxpayers earning in excess of the $250,000 threshold.

Both sides agree on extending the lower rates for middle-income Americans, Democrats argue, but they say Republicans are preventing that from happening out of allegiance to a dogmatic opposition to any kind of tax increase on even the wealthiest Americans.

Opinion: Why are tax hikes politically radioactive?

Democrats also point to polling that shows a majority of Americans support their approach.

Wednesday's votes completed each party's opening bid in what is sure to be a frenzied legislative negotiating session after the November vote.

The economy is approaching a so-called "fiscal cliff" brought on by the looming expiration of several tax cuts as well as the approach of a series of mandatory spending cuts.

Senate votes on competing tax plans

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