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Borrow And Spend

Via Holden at First Draft, the Associated Press reports Bill Easing Tax Clears House

WASHINGTON (AP) — House Democrats on Friday pushed through an $80 billion bill to block the spread of a dreaded tax on middle-income people. The White House and Republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained that it would never become law.

The 216-193 vote to ”patch” the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it.

What is certain is that if Congress and the White House do not reach a compromise by the end of the year, anywhere from 21 million to 25 million middle-income taxpayers will be hit by the AMT, costing them as much as $2,000 in extra taxes.

Friday’s bill would extend AMT relief for one year, at a cost of about $51 billion. It includes another $30 billion in largely popular tax relief measures, including expanding the child tax credit, providing a property tax deduction to some 30 million families and extending a tax exemption for the combat pay of military personnel.

It extends several dozen targeted tax breaks due to expire at the end of the year, including a deduction for college tuition, a deduction for teachers’ out-of-pocket expenses and deductions for residents of states that do not have income taxes. Others benefit winemakers, employers of Katrina victims, contributors to charities and state lawmakers.

The controversies come over some $80 billion in new tax revenues required under House Democratic rules that tax cuts or spending increases be offset so that the federal deficit does not grow.

The “tax increases” are the closing of a loophole that allows fund managers to declare their income as capital gains, which have a 15% rate, rather than wages which would probably be at a 35% rate. This change only affects thousands of overpaid Wall Street types, and everyone with two brain cells realizes that this is a loophole, not an intended outcome. The Repubs want the cuts, they just don’t want to pay for them which is why the deficits mounted when they controlled Congress. Borrow and spend – it’s the Repub mantra.

2 comments

1 Michael { 11.10.07 at 3:09 pm }

And someone in the House actually browbeat the Repukes with that very frame. Don’t remember his name, but he was definitely from somewhere south of the Mason-Dixon line. Heard the story on NPR yesterday afternoon as I was driving home from work. Damn near swerved off the road when Bonehead Boehner started (predictably) prating about how this was a tax increase and that only people who wanted big government and more spending would vote for it. The irony that, given their behavior over the last six and a half years, the Republicans should have lined up in droves to vote for just such a bill, was apparently lost on the Minority Leader.

2 Bryan { 11.10.07 at 3:37 pm }

The attack ads write themselves on this issue – fiscal irresponsibility, support millionaires not the middle class, biggest deficit in history, etc. There are a lot of Repub fiscal conservatives who would respond to that message.

The Shrubbery has left the party with nothing to work with having destroyed everything he touched and in Florida we should start putting anyone who runs for office as a family values Repub on the sex offender list just to save time.