Legislation that would extend for two years Bush administration tax cuts for all income levels cleared a Senate hurdle today.
In a strong bipartisan vote, the Senate closed out the possibility of a filibuster on the $858 billion measure and agreed to move to final passage, which is also expected to draw widespread support, in the next day or two. The bill will then be sent to the House.
The number of senators voting “yes” reached 69 as of 4:45 p.m. Eastern time, easily overcoming the 60-vote threshold for a filibuster. The vote was being held open because of inclement weather around the country that might delay senators’ return to Washington.
In an appearance on Monday at the National Press Club in Washington, House Majority Leader Steny Hoyer, D-Md.,
said that Democrats may try to amend the Senate bill.
Democrats are particularly upset with the estate tax provision, which would put that rate at 35% with a $5 million exemption. It also would reinstate the “step-up” in basis calculation for inherited property in which heirs can claim fair market value at the time of a relative’s death.
The House approved a 45% rate with a $3.5 million exemption in 2009. That proposal languished in the Senate and was trumped by the agreement between the Obama administration and Capitol Hill Republicans that led to the bill extending the Bush tax cuts implemented in 2001 and 2003.
“I think we’re going to have a vote on the Senate bill, with possible changes,” Mr. Hoyer said.
The overwhelming Senate support demonstrated in Monday’s procedural vote limits the House’s latitude to amend the bill. A revised measure would have to go back to the Senate for another vote.
Both chambers are trying to wrap up their lame-duck session by Dec. 17. If Congress doesn’t act by Dec. 31, the estate tax will zoom up to 55% with a $1 million exemption while tax rates for all earning levels will revert to their higher late-1990s levels.
Mr. Hoyer said that the House Rules Committee or the tax-writing Ways and Means Committee might try to revise the Senate bill.
“If they do so, we’ll have votes on those amendments,” Mr. Hoyer said.
The votes will give House Democrats a chance to vent their spleen about the estate tax. Approving amendments, however, would be difficult. If all 179 House Republicans stay unified, it would take close to a majority of Democrats to pass the bill.
In addition to continuing marginal-rate-reductions, the bill includes a raft of other tax breaks, maintains a 15% rate on capital gains and dividends, provides a 13-month extension of unemployment benefits and a 2% cut in payroll taxes for workers in 2011 and enacts many other provisions designed to stimulate the economy.
In Senate debate before today’s vote, Democrats accused Republicans of holding “hostage” tax cuts for the middle class —which they define as individuals who make $200,000 or less or families who make $250,000 or less — to tax breaks for “millionaires and billionaires.”
Nonetheless, many Democrats voted for the tax cut bill because of what they said would be its positive effects on the economy.
“Now is certainly not the time to be raising taxes on middle-class families,” said Sen. Max Baucus, D-Mont., the
chairman of the Senate Finance Committee. “This bipartisan compromise is about creating jobs.”
Senate Republicans argued that the path to economic recovery lies in keeping taxes low for everyone.
“This bill is about stopping the biggest tax increase in the history of the country,” said Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee. “You should not increase taxes during an economic
recession.”
