The GOP-led House of Representatives voted to extend the Bush tax cuts in one of their last votes before a summer recess that will last five weeks. This issue will continue to be a hot-ticket item heading into the November elections. The Bush era tax cuts were given during a time of surplus. The president had the option of giving tax cuts or paying down the deficit. He opted to cut tax rates. This is proving to be an issue that will not go away.
Wednesday’s vote sets the stage for the greatest difference between the two prominent parties in the United States. GOP leaders have called for no new taxes, while Democratic leadership is calling for the tax breaks given by President Bush to expire. Republicans plan to keep the tax cuts in place, while Democrats want the tax cuts to expire for the top 2 percent of American wage-earners.
The Democratic-led Senate voted to allow tax rates for individual earnings over $200,000 and couples’ earnings over $250,000 to increase. The House countered by shooting this option down. President Obama has vowed to veto legislation allowing the top 2 percent of the nation’s wealthiest tax payers to continue paying the current low income tax rate. The tax rates currently in place will expire on Dec. 31 without a bipartisan decision.
The House voted 256 to 171 to veto the change. Nineteen Democrats supported the plan, while one Republican voted against it. This proposal called for tax rates to increase from 33% to 35% and 35% to 39.6%. Tax rates on capital gains as well as dividends were also set to increase to 20%. Estate taxes were to go up from 35% to 55%, the rate that was in place in 2001. Democrats also wanted to continue the tax breaks given in 2009, which included child care credits and costs for attending college.
The White House has released estimates that the Republican plan would cost $1 trillion more than the Democrat’s plan over the next decade. This increased estimated cost has led to the president threatening to veto the Republican’s plan if it was approved.
Congress has once again proven that politics will prevent them from doing its job and working out issues that plague the nation’s economic recovery. These never-ending disputes led to the credit rating for the U.S. to be downgraded last year and if things don’t change soon, another downgrade is on the horizon. It is time for American voters to decide how far they are willing to allow the nation’s financial stability to fall before they hold their elected leaders accountable for doing the jobs they were elected to do.
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