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Parties Maneuver to Gain Advantage on Taxes

Democrats Rip GOP Plan for Eliminating Tax Breaks for Middle Class

As both parties continued their campaigns to gain the upper hand on taxes by the time real negotiations take place during the post-election lame-duck session, Senate Democrats took the offensive in advance of a vote in their chamber scheduled for today.

Senate Democratic Conference Vice Chairman Charles Schumer took the lead for his party, criticizing a GOP plan that would not extend some middle-class tax benefits from the 2009 stimulus law pushed by President Barack Obama.

The three tax provisions that would not be extended by the Republican offering from Finance ranking member Orrin Hatch (Utah) provide benefits for college students and working-class parents.

“Buried deep inside Sen. Hatch’s proposal are three backbreaking tax hikes on middle-class families,” the New York Democrat said. “Republican taxwriters managed to leave out at least three big tax breaks from the middle class.”

Republicans said the Democratic argument is a canard. Pressed about Schumer’s charge, Minority Whip Jon Kyl responded that the package may not be without fault ­— but that the underlying message about extending tax rates should prevail.

“Would you then be satisfied to just let everybody in the country have a big tax increase, over $4 trillion over 10 years, because one of the things you wanted was not included?” the Arizona Republican said.

“Now, I’m going to find out why that is not included. But if that is the excuse to vote against a bill, which would keep Americans from having their taxes increased, that does not sound like a very legitimate excuse to me,” Kyl added.

Democrats think they might have a winning issue on the underlying debate about whether to extend the 2001 and 2003 marginal tax rates for individuals making more than $200,000 and families making more than $250,000.

Majority Leader Harry Reid (D-Nev.) on Tuesday started a exchange of verbal barbs by offering his Republican counterparts simple-majority votes to just call up and pass each proposal.

Minority Leader Mitch McConnell (R-Ky.) countered that the Senate should also vote on a tax plan floated by Obama, without ever saying why he opposed Reid’s vote deal.

“The Majority Leader and I are under discussions as to how we proceed to vote on taxes. But we welcome the opportunity to vote on their proposal and think that fundamental fairness would dictate that we get a chance to vote on what we think would be the best way forward for the American economy in this particular situation,” McConnell said.

Questioned about the matter Tuesday afternoon, McConnell said he was still “discussing the threshold” question. Without a deal, the Senate will only hold an initial
cloture vote on calling up Reid’s plan.

Democratic aides have said that if the bill could pass with only a simple majority, Reid’s version would pass the Senate. Sen. Joe Manchin (D-W.Va.), for instance, said he would support Reid’s package.

Neither side has produced a bill that includes all of the tax benefits that Senators want to keep going, so it is unclear whether either party is well-served by wading too far into other parts of the tax code.

The House version avoids similar specifics. Also on Tuesday, House Ways and Means Chairman Dave Camp (R-Mich.) unveiled his own tax cut extension plan with Rules Chairman David Dreier (R-Calif.). The House GOP proposal, like language floated by Senate Republicans, would help expedite legislation to overhaul the tax code next year while extending the existing tax rates for another year.

“Despite more than three years of high unemployment, the President and Democrats who control Washington are calling for higher taxes that will eliminate more than 700,000 jobs,” Camp said in a statement introducing the bill. “That is the wrong direction, and I call on President Obama and Congressional Democrats to join Republicans and abandon their pursuit of job-killing tax hikes.”

In the midst of the tax speechmaking on Capitol Hill, lawmakers have staged a parallel campaign at a think tank on the other side of town. In the past two weeks, Democratic Sen. Patty Murray (Wash.) and Republican Sen. Pat Toomey (Pa.) have appeared at the Brookings Institution to write the history of the failure of last year’s deficit reduction super committee. The two tracks could collide in the lame duck if the work product from the various deficit-slashing panels is to become the basis for a final deal.

Toomey appeared at the think tank Tuesday morning to rebut Murray’s claim from last week that his debt reduction offer would have given bigger tax breaks for the wealthy at the expense of the middle class.

Toomey said the tax proposal he had floated would be adjusted to ensure that effective tax rates would not increase for lower-income taxpayers.

Responding to Murray’s suggestion that allowing all of the Bush tax cuts to expire would be preferable to extending current rates on the upper brackets, Toomey said taxpayers will not be easily deceived by “gymnastics” about tax rates.

“We’re not going to fool anybody, and I wouldn’t want to try,” Toomey said.

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