New Tax Cut Compromise Proposed in House
Updated: 10:19 a.m.
Two senior House Democrats are floating a compromise plan to extend the 2001 and 2003 tax cuts and are demanding a vote before adjourning for the midterm elections, according to a letter obtained by Roll Call.
Reps. Mike Capuano (Mass.), who is close to Speaker Nancy Pelosi (D-Calif.), and Bill Pascrell (N.J.), a member of the Ways and Means Committee, proposed a five-year extension of the Bush-era tax cuts for individuals earning less than $200,000 and families earning less than $250,000, a five-year extension of cuts in capital gains and dividend tax rates, and a one-year extension of tax cuts for individuals with incomes of less than $500,000.
The idea is intended to break the logjam that has paralyzed Democrats in both the House and Senate, with liberals insisting on tax cuts only for the middle class and moderate Democrats embracing an extension of all the tax breaks until the economy improves.
“It is imperative that the House of Representatives be given a chance to vote on the expiration of the 2001 and 2003 tax cuts for the middle class before we adjourn,” the letter states. “We refuse to accept that Congress cannot find common ground amongst our Members. We are willing to work to find it.”
One Democratic aide said, however, that it’s only the latest bad idea to be introduced. “Every day we are in session, someone comes forward with a new dumb idea to vote on,” the aide said. “We have got to get out of town.”
The letter comes as party leaders have been divided over how to proceed. House Majority Leader Steny Hoyer (D-Md.) has preferred to wait and see whether the Senate will take action, noting publicly how many House-passed bills remain stuck in the other chamber. But aides have said Pelosi is convinced that the tax fight is a winning issue for Democrats that will motivate the party’s base heading into the elections.
Pelosi, however, has not yet committed to a vote before adjourning, and her position has been undermined by moderates urging her to hold a vote on extending all of the tax cuts or to punt until the lame-duck session.
But entering a Thursday-morning Democratic Caucus meeting, Pascrell said he would make a strong case for dealing with the tax cuts before the elections.
Pascrell said he disagreed strongly with moderate Democrats who preferred to wait until after the elections.
“That’s the worst thing to do,” he said. “You have to reduce the anxieties immediately. That’s what’s holding back Americans from spending money — people who have assets who are sitting on it wondering, What’s going to happen to the tax cuts?'”
Pascrell said acting now on his compromise proposal could reduce some of that anxiety and help the economy.