Senate passes Democrats' tax cut plan

U.S. Sen. Harry Reid (D-NV) (L) and U.S. Sen. Charles Schumer (D-NY) (R) leave the Senate chambers with U.S. Vice President Joe Biden to speak at a press conference following a 54-45 vote against a House bill that would include the wealthiest Americans in an extension of the Bush-era tax cuts on July 25, 2012 in Washington, DC. The Senate instead approved by a vote of 51-48 a Democratic bill that excludes the highest-earning Americans from a yearlong extension of tax cuts. / Getty Images

(AP) Democrats pushed a yearlong extension of tax cuts for all but the highest-earning Americans through the Senate on Wednesday, giving Democrats a significant political victory on a measure that is fated to go no further in Congress.

Senators approved the Democratic bill by a near party-line 51-48 vote, with Vice President Joe Biden presiding over the chamber in case his vote was needed to break a tie. Minutes earlier, lawmakers voted 54-45 to kill a rival Republican package that would have included the best-off in the tax reductions.

The $250 billion Democratic measure would extend tax cuts in 2013 for millions of Americans that otherwise would expire in January. But it would deny those reductions to individuals making over $200,000 yearly and couples earning at least $250,000.

With control of the White House and Congress at stake in elections less than four months off, passage of the Democratic bill aligned the Senate with the tax-cutting vision of President Barack Obama. Obama has made tax fairness — which includes tax increases on the rich — an overarching theme of his re-election campaign, and rejection of the measure would have been an embarrassment for the president and Senate Democrats.

The vote also served as a counterpoint to the GOP-run House, which next week will approve tax cuts nearly identical to the $405 billion Republican plan the Senate rejected Wednesday.

"With the Senate's vote, the House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98 percent of Americans and nearly every small business owner," Obama said in a written statement after the vote.

The fight also underscored the competition for voters between Democrats and their populist theme of tax equity and the GOP's focus on helping business owners create jobs.

It took just minutes for Democratic Senate campaign officials to send emails saying that Sen. Dean Heller, R-Nev., was "holding tax relief for the middle-class hostage by demanding more millionaire tax breaks." GOP Senate campaign operatives sent out similar emails, with one saying Sen. Jon Tester, D-Mont., had voted to "raise taxes on Montana farmers, ranchers & small business owners."

Tester and Heller are in tight re-election contests this November.

Two senators who will retire next year — Jim Webb, D-Va., and Joe Lieberman, a Connecticut independent who usually votes with Democrats — were that party's only defectors on final passage.

Opposing the GOP measure were Sen. Scott Brown, R-Mass., who faces a tough re-election fight in November, and Sen. Susan Collins, R-Maine. Sen. Mark Pryor, D-Ark., who could have a tight re-election in 2014, voted for both the Republican and Democratic plans.

"The question is, who are you fighting for," Sen. Barbara Boxer, D-Calif., said before the vote. "Are you fighting for the people who make a billion dollars a year? That's who the Republicans are fighting for, and they get so emotional about it. Or are you fighting for the middle class, the heart and soul of America."

Republicans said the measure was all about Democratic posturing for the upcoming elections and would hurt the economy because boosting taxes on the wealthy will hinder them from hiring workers for their companies.

"Thank goodness it's not going anywhere because it would be bad for the economy, the single worst thing we could do to the country," Senate Minority Leader Mitch McConnell, R-Ky., said.

With Senate control at stake in November's elections, Republicans were hoping that several Democrats seeking re-election would hurt their candidacies by having backed the Democratic package. The bill would dramatically boost the estate tax, which would be widely unpopular in farming, ranching and high cost-of-living states, and increase levies on dividends and capital gains, which are relied on by many elderly people.

"That's what today's votes are all about," McConnell said in a thinly veiled warning to Democrats. "Showing the people who sent us here where we stand."

Under the Democratic measure, individuals earning over $200,000 and couples making at least $250,000 would see their top rates rise from 33 percent and 35 percent today to 36 percent and 39.6 percent in January.

Democrats argue that the well-off should contribute to efforts to contain federal deficits, while Republicans say many of those affected own businesses and would have a harder time hiring workers. The increase would affect 2.5 million households, or 2 percent of all 140.5 million tax returns, according to 2009 Internal Revenue Service statistics.

The Democratic bill would also boost the top tax rate paid by people who inherit estates to 55 percent, exempting the first $1 million in an estate's value. The GOP measure would maintain today's 35 percent top rate and would not tax the first $5.12 million of an estate's value.

In fresh figures released this week by Republicans, Congress' nonpartisan Joint Committee on Taxation estimated that the Democratic provision would affect 55,200 estates next year, compared with 3,600 who would face estate taxes under the GOP plan.

Democrats would impose top tax rates next year of 20 percent on dividends and capital gains, two sources of income enjoyed disproportionately by the wealthy. The GOP top rate would be 15 percent.

The GOP bill ignores some tax credits for low- and middle-income families that Democrats want to extend for college costs; for some low-income couples and large working families; and for families with children.

All were part of Obama's economic 2009 stimulus bill. Democrats say those tax breaks were meant to be permanent but Republicans say they were only a short-term response to the recession.

[hillzhaveays]

by TimeToEvolve July 26, 2012 1:48 PM EDT
Why is government spending all a sudden a problem since 2008? The Republicons were spending us into oblivion for 8 years before that, that is where the huge debt came from.
____________________________________________

Oh, OK, let's just continue spending then, you're right.

[TimeToEvolve]

We the People need to take this nation back from the takers, the very rich. We have given them a free ride for far too long. They have systematically taken apart our public education system, manufacturing system and declared war on the middle class (since Reagan). They have purchased the media and taken advantage of the American people without offering much in return.

The Senate (at least half) knows that this trend will lead to revolution because the Top 1% have gone too far and do not know when to stop because they are actually crazed with wealth.

[sjc_1]

If the Republicans had renewed Pay As You Go in 2003 when they took over Congress, they would not have done tax breaks and wars that we could not pay for, then we would not be in this mess today.

[TimeToEvolve]

The point is that it is time for the very wealthy and the big corporations to pay their fair share (the same as I do). It is the idea that the rich used our nation and its people to make their money and it is time to chip in. The Top 1% own something like 80% of the wealth of America. Some of these CEOs make THOUSANDS of times more than the workers that produce the wealth for them.

[Socialistnation]

Big freaking deal. even if this Tax increase on the top 2% took effect, it would pay for 8 days of the Governments spending.

This is all political posturing and is worthless.......

[hillzhaveays]

Correct, but since your comment involves math, do not expect it to be absorbed by the Lefties.

[TimeToEvolve]

Why is government spending all a sudden a problem since 2008? The Republicons were spending us into oblivion for 8 years before that, that is where the huge debt came from.

[angeljperea]

KEEPING IT THOUGHTFULLY HONEST: Hey Mr. McConnell and the Senate Obstructionists, Thank you for your recorded up-and-down vote to make your party's position perfectly clear for the next election! Let's see! It's was to a vote to STOP the back to the future of more G.W Bush depression economic Policy of tax cuts for Billionaires and millionaires to create another Trillion dollars of national debt! The Senate was able to avoid the 138th filibuster to allow "voted on Wednesday to keep current rates for people with incomes of less than $250,000. Tax rates would rise by 4 percent on incomes above $250,000 for couples and $200,000 for single filers. Popular breaks like the child tax credit would be preserved." The Tax relief extension passed on a vote of 51 Democrats and Independents for to 48 republicans against which provides a short-term win for the Middle Class Americans! However, this Senate pass bill that is supported by our President must deal with the political reality of needing passage in the House! Speaker John Boehner (R-Ohio) and his republicans will NOT allow a vote since they know that if he puts this bill on the House floor, his republicans will be trouble going on the record to vote against it. So it won't happen! THE INCONVENINET TRUTH: However, it does make it perfectly clear what many of us have been saying, Who stands for Middle Class Americans and who is more interested in continuing the class war to protect the Billionaires and Millionaires?

[Socialistnation]

Millionaires and Billionaires? LOL. Do you know who makes up the majority of the top 2%?????

What a joke.. Nothing but Propaganda. This Tax increase on the top 2% would cover about 8 days of Government spending. It is useless......

[CaptainSmollett]

Do you liberals really believe that the rich having more means you have less? That the rich adversely effect your financial circumstances, and your lot in life? Do you really believe that taxing them will make you better off?

Are you really that stupid...or just consumed with envy?

Any administration that raises taxes on anyone in a weak economy is either irresponsible or flat-out incompetent!

[hsinco-2009]

The Bu$h tax cut for the rich constitutes the majority of the deficit.

[WHAT-IS-HE-SMOKING]

So then by your logic Reagan had a weak economy and so did Bush. They are one ones who did the trickle down economic that didn't work very well for the lower income levels, now did it.

[CaptainSmollett]

Headline: "Senate passes Democrats' tax cut plan"

Give me a break CBS. Everyone knows the plan is a tax INCREASE.
Stop with the spin.

[hsinco-2009]

Perhaps you can call it a tax increase on those making more than $250k/year but not on the rest of the 99%.

[dj_chi]

Then the GOP should have made them permanent tax cuts instead of temporary cuts. Expire means expire.

[OweninNJ]

"With the Senate's vote, the House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98 percent of Americans and nearly every small business owner," says Obama.
"The question is, who are you fighting for," Sen. Barbara Boxer, D-Calif., said before the vote.

The Left has a plan. It's called envy. Envy your neighbor. Envy you friends. Envy the rich guy that you don't know. Envy the fellow down the street who still has a job. Let your envy metastasize into hatred and then, vote for me.

[hsinco-2009]

Boy you must have the same talking point memo as the other trolls here today.

[nearl451]

I frankly am shocked that the Republicans didn't filibuster.....and I wouldn't say the bill is dead in the house.

In the house version, an amendment will be made to either throw away OR raise the rescind threshold. If it passess, Obama will sign it....I'm betting on it anyway.

[lami987]

Businesses big and small are not job creators. Consumers are. Jobs are created when masses of consumers buy. When consumers can't afford to buy businesses will layoff their workers regardless of how much money they have or how much tax cuts they got. When masses of consumers buy businesses will hire more workers. When businesses need to expand they can borrow at very reasonable interest rates. $100 earned by a low or middle income creates more jobs than $100 earned by a high income. Because low and middle income spends all $100 in the U.S. while high income spends some out of the country. Worse yet if they hide their money in tax havens around the world.

[76SpiritOf]

Ok moron where do consumers get their money to consume those goods?

Answer: They get their money by working for companies that pay enough so they have disposable income to purchase goods and services.

However, lami987 is correct. You need demand for goods and services to create a need for business to produce these items. Sending all of our good paying jobs offshore to increase the profitability is not in our best interest economically speaking.

For example when tens of thousands of workers are laid off and force to take cuts in pay the effect on the economy is catastrophic, even if all the wealth is transferred to a couple of well off individuals. Simply put 2 or 3 billionaires will not consume anywhere near the goods and services that 20,000 or 30,000 families making 50K per year will.

Since our economy is consumer based, the idea of trickle down is a total failure for the majority!

I support the democrats in this one and fully intend to vote straight ticket to show the top 1% that their money is not going to buy the ballot box.

I urge everyone else to do the same and enjoy watching the Koch brothers cry their crockadile tears when they lose!

[democracy8]

tb91006: YOU need to educate yourself on economics. lami987 is 100% correct. If it weren't for consumers, businesses would go OUT of business, period. By the same token, the ONLY reason that businesses hire is because of increased demand. And that comes from consumers. Sheesh!