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Parties Settle In for Contentious Tax Fight

Chris Maddaloni/CQ Roll Call File Photo
House Majority Whip Kevin McCarthy is leading Republicans’ messaging blitz regarding the extension of the Bush-era tax cuts.

What we have here is a good old-fashioned staring contest.

Both Democrats and Republicans believe their message on the extension of the Bush-era tax cuts is a winner, and with just weeks to go before August recess, neither party is likely to back down.

House Republicans, for their part, are kicking off a 10-day messaging blitz today aimed at differentiating themselves from Democrats in the runup to the chamber’s vote on extending all of the Bush-era tax cuts.

The effort will culminate in “Stop the Tax Hike Day” on July 27 — the last Friday before the House will vote to extend the entirety of the 2001 and 2003 tax rates during the week of July 30.

House leadership is organizing Republicans to travel back to their districts and hold events with small-business owners that day, emphasizing the GOP talking point that increasing taxes on those making more than $250,000 would hurt small businesses and job creation.

President Barack Obama and most Democrats have endorsed allowing the tax cuts on those high-income earners to lapse, while extending the cuts just for those making less than $250,000.

The House GOP effort, anchored from the office of Majority Whip Kevin McCarthy (R-Calif.), will consist of op-eds, video messages, floor speeches and television and radio interviews highlighting Members’ involvement in stopping the tax hike.

“We will have two weeks to message our vision for tax reform,” according to an email from McCarthy’s office to Republican Members that was provided to Roll Call. “To successfully achieve this we will be asking each office to serve as a ‘tax fighter’ on a particular day within the next two weeks.”

McCarthy held a conference call with district directors last week to organize the effort, and Members are being encouraged to drive home specific talking points, according to communications from the House Republican Conference.

Leadership wants Members to emphasize that, according to the Congressional Budget Office, failure to extend the tax cut and a path to the alternative minimum tax would raise taxes on small businesses and Americans by $4.6 trillion over 10 years and $232 billion in 2013 alone, which would “destroy jobs during the worst employment crisis since the Great Depression.”

They emphasize polls from the National Federation of Independent Business that found that most small businesses pay their taxes as individuals and could be subject to a tax hike, and that in June, small businesses cited taxes as the most important problem they are facing today.

Furthermore, they say, according to the Joint Taxation Committee, 53 percent of business income reported on individual returns would be hit with a tax hike under the Democrats’ tax extension plan.

But Democrats seem equally confident with their line of attack: that Republicans want nothing more than to protect tax breaks for millionaires and special interests.

House Minority Whip Steny Hoyer told reporters Tuesday that the president and Democratic Congressional leadership were calling on Republicans to “bring to the floor as soon as possible” a bill that would extend the Bush tax cuts for income under $250,000 per year. “To do otherwise would ... be a depressant on the economy,” Hoyer said.

The Maryland Democrat also pressed Republicans to allow a markup on the tax cut extension bill they plan to bring to the floor, noting he asked House Majority Leader Eric Cantor (R-Va.) about the issue at their colloquy last week but that Cantor “would not respond.”

“At [a] very minimum, we owe it to the American people to have the committee vote on amendments to this proposal and see where Members are voting,” Hoyer said.

Senate Majority Leader Harry Reid (D-Nev.) introduced a plan Tuesday to extend for one year the 2001 and 2003 tax rates only for those making less than $250,000. A vote in that chamber could come as soon as this week but will most likely be held next week.

Several high-profile Congressional Democrats, such as Sen. Patty Murray (Wash.), who chairs the Democratic Senatorial Campaign Committee, and Majority Whip Dick Durbin (Ill.), have said that they would be willing to let all the tax cuts expire if Republicans do not compromise by allowing taxes to rise on some high-income earners.

That has caused some optimism among the rank and file. Rep. Peter Welch, who opposed the 2010 extension of the tax cuts, said he supports the hardball tactic of letting all the tax cuts expire and then proposing to reinstate only the middle-class tax cuts.

“We’ve seen this movie before, and the question is: Will Democrats take advantage of the leverage shift in our favor? I believe we will hold firm this time,” the Vermont Democrat said. “We’re in a good position on the politics and on the policy. So this is a fight that needs to be had, and we’re in a position to win it.”

Jonathan Strong contributed to this report.

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