Senate Democrats pushed through Wednesday legislation that would phase out the so-called “Bush-era” tax cuts except for families earning $250,000 or less at the end of this year.
But the vote is largely symbolic because Republicans control the House and House majority leader Eric Cantor, R-Va., announced soon after the vote that the House will vote next week on legislation that would extend the Bush-era tax cuts.
Analysts don’t expect compromises on ongoing tax policy until after the November election. Some groups predict that the stalemate will remain through this Congress and that the issue won’t be resolved until next year.
“While the president and Senate Democrats push for a massive tax hike on small businesses, the House will vote to stop the tax hike next week,” Cantor said.
“We know small businessmen and women do build their businesses and we are acting to give them more certainty and opportunity to grow again,” Cantor added.
Earlier, however, Vice President Joseph Biden said after the Senate vote that, “This is a big victory for the American people.” Biden’s presence in the Senate chamber was a symbolic move, as his vote was not needed to put Democrats over the top.
The bill follows through on an election-year call from President Obama to protect the middle class from an income tax hike next year. He has campaigned on the message that wealthier Americans should pay more in taxes to help reduce the national deficit.
“Democrats believe this country can’t afford more budget-busting giveaways for the top two percent of earners,” Majority Leader Harry Reid told his fellow senators on the floor.
The Senate bill the Democrats passed, S. 3412, is similar to legislation (S. 3393) introduced last week, except that S. 3412 removes any mention of estate tax rates. Upshot: absent affirmative action, the estate tax will spring back to 2001 levels, with a $1 million personal exemption and a 55% top tax rate effective Jan. 1, 2013.