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Brinkmanship Over the Bush Tax Cuts – BusinessWeek
Loading ...Until recently, it was a given that President Barack Obama would make good on his campaign pledge to let the Bush-era tax cuts that benefited wealthy Americans expire at the end of this year. Ditto for his promise to maintain the tax cuts for households earning up to $250,000 a year.
This being an election year and the economic recovery looking shaky, Washington is having a rethink. While lawmakers from both parties want to keep the tax reductions for families earning less than $250,000, Republicans say this is no time to raise taxes and insist on continuing the cuts for high-income families, too. Now a game of political chicken is unfolding, and wealthy Americans could benefit.
All the tax cuts (passed under President George W. Bush in 2001 and 2003) will expire on Dec. 31 if Congress fails to act, an outcome neither party desires. The middle-class reductions gave couples a 10 percent rate on their first $14,000 in income, subsidies for college expenses, a higher child credit, and relief from the marriage penalty.
In theory, it should be easy for Democrats to extend just the middle-income cuts. Budget rules adopted by Congress earlier this year allow lawmakers to extend them without offsetting revenue increases. That’s a huge break: Keeping the cuts for the 130 million households earning less than $250,000 will cost about $255 billion a year.
Continue Reading at BusinessWeek.
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