Senate passes $70 billion tax cut bill

Bush weighs in
In a Wednesday statement, Bush said that “our pro-growth policies have helped the economy create more than 5.2 million jobs since August of 2003.

“By extending key capital gains and dividends tax relief, the House has taken an important step to continue to help hardworking Americans and to keep our economy strong and growing.”

Added House Speaker Dennis Hastert, R-Ill.: “By extending key provisions of that tax relief, today’s legislation adds just another spark to the already booming economy.”

Critics, including most Democrats, attacked the tax rate reductions on dividends and capital gains as being skewed in favor of the rich. They noted that it was the second half of a GOP budget package that began with $39 billion in deficit cuts over five years, many of which came from programs for the poor such as Medicaid.

Democrats also cited a joint study by the Urban Institute and the Brookings Institution that shows taxpayers with incomes greater than $1 million per year winning tax cuts of $42,000 under the bill, while families with incomes of $50,000 a year would average a $46 tax cut.

“The Republican Party ... is sending all the millionaires on an all-expenses-paid vacation — for $41,000 a year,” said Rep. Jim McDermott, D-Wash. “The rest of America is being forced to choose between filling the gas tank or stocking the refrigerator.”

Added Richard Neal, D-Mass: “You cut taxes for Wall Street at the expense of Main Street.”

Just 15 Democrats joined all but two Republicans in voting for the House bill.

Two-bill strategy
Passage of the bill is the first step of a two-track strategy for advancing the GOP’s election-year tax cut agenda.

The first, $70 billion tax bill focused on investor tax breaks and alternative minimum tax relief. Another bill will advance later that contains up to $30 billion in tax breaks backed by Republicans and Democrats.

Those including preserved tax deductions for state and local sales taxes, a tuition tax deduction, a tax break for teachers who buy their own school supplies and a research and development tax credit for businesses.

Under the bill passed Wednesday, wealthier people would be allowed to transfer retirement savings into Roth IRAs. This would provide a shorter-term revenue boost, and therefore helped lawmakers fit more measures into the bill. That’s because money moved from traditional IRAs into Roth accounts is taxed immediately, instead of later, when taxpayers withdraw their invested money.

Opponents say the Roth plan would help the Treasury now but shortchange the government in future years because money saved in a Roth IRA grows tax free.

The bill also would extend for two years provisions sought by small businesses to let them write off up to $100,000 in investments in equipment.

MORE FROM POLITICS

Politics Section Front

Senate set for health care debate Levin: Afghan forces key to success Newsweek: Why Cheney should run in 2012 NYT: White House intruders want to sell tale Oprah to visit White House for TV special NYT: S.C. rift highlights debate in GOP Life isn’t all glamor for Obama crashers Marines to renew focus on Taliban haven Can Obama retain Hispanic support? Senate report: Bin Laden was 'within grasp' Politics Section Front   Add Politics headlines to your news reader: