With only two weeks until every American’s taxes get hiked, Congress passed a tax compromise package last night that keeps all tax rates the same for the next two years.
Speaker of the House to-be John Boehner (R-Ohio) said on Friday that despite the deal, he wants a Republican-controlled House to pass permanent tax cuts.
“If we’re serious about getting the economy moving again, we’ve got to end the uncertainty coming out of Washington. That uncertainty is created when you have temporary tax provisions,” said Boehner. “Two years is better than a tax hike on January 1st, but it will not end the uncertainty.”
“That’s why we believe that making the tax cuts permanent…will end some of the uncertainty, so that people can make decisions about how to invest in their business, and how to invest in the economy,” said Boehner.
President Obama and Congressional Republicans negotiated the compromise package, but needed Democrat votes in the lame-duck session for passage.
“I made it clear, going back over the summer, that stopping all of the tax hikes was one of our main priorities for this lame-duck session,” said Boehner. “Considering that the Democrats control the House, the Senate, and the White House, I thought, on balance, it was worthy of my vote.”
The House voted 277-148 for final passage of the so-called “Middle Class Tax Relief Act of 2010.” On Thursday, the Democrats attempted to alter the bill so that more Americans would be hit with a death tax. The Democrat alternative, an amendment sponsored by Rep. Earl Pomeroy (D-N.D.), failed by a vote of 194-233.
The Senate passed the bill on Tuesday by a strong bi-partisan vote of 81-19. President Obama will sign the legislation into law on Friday afternoon at the White House.
“Today, the President will sign a bill that ensures no American gets a tax hike on January 1. Republicans have fought hard for this legislation. Up until last week, most Democrats resisted,” Senate Minority Leader Mitch McConnell (R-Ky.), who directly negotiated the deal with the President, said on Friday. “But, in the end, the American people were heard.”
The tax deal was supposed to come up for a vote in the House on Thursday afternoon, but the liberal Democrats staged an uprising against their leader, Speaker of the House Nancy Pelosi (D-Calif.). The Democrats wanted two votes on the record: for the Pomeroy amendment to raise the death tax rate, and against the final tax deal which prevents tax hikes.
The liberals forced Pelosi to pull a rule off the floor, a very rare occurrence, which demonstrates weakness in the leadership. She then spent hours negotiating with her caucus to come up with a new rule, which allowed the tax deal to finally get a vote at midnight.
The tax deal was possible because of the results at November’s midterm election, which gave Republicans control of the House and more votes in the Senate. The Republicans used their election leverage to force the Democrat-controlled Congress and President Obama to stop the tax hikes, which they had not dealt with all year.
In the final compromise package, the GOP got its demands to stop the pending tax hikes on January 1 by extending for two years the Bush tax cuts for all income rates, capital gains/dividend rates, a lower death tax, and an adjusted Alternative Minimum Tax (AMT).
For Obama, he got federal unemployment benefits extended for 13 more months without cutting spending, extend tax credits for lower income Americans as established in his stimulus bill, and extend specific business tax credits.
With just two weeks before the deadline, Americans can now rest assured that their taxes will be the same on January 1. And, even better news is that when the Republicans take control of the House next year, they will fight to make permanent all the current tax rates.
Happy New Year!