Obama faces House tax-deal hurdle
By Stephen Ohlemacher |
December 9, 2010, Thursday
|
Print Edition
Print Edition
PRESIDENT Barack Obama still has work to do to sell the tax package he negotiated with Republicans to Democrats in the US Congress.
House Democratic leaders say the package is tilted too much in favor of the wealthy, putting Obama on the defensive for striking a deal that is picking up support among lawmakers and business groups.
Some Democrats are unhappy that Obama agreed to extend expiring tax cuts to all Americans, including high earners, and that he agreed to impose a lower estate tax on wealthy heirs. Both provisions are seen by many Democrats as giveaways to the rich that will do little to help the economy.
In return, Democrats would get extended jobless benefits for people who have been unemployed for long stretches.
Obama went on national television on Tuesday to say that compromise is necessary to prevent a massive tax increase that would hit taxpayers at every income level and to prevent millions of unemployed workers from losing jobless benefits. "This country was founded on compromise," the president said.
Despite their minority status, Senate Republicans last week blocked Obama's long-promised bid to end Bush-era tax cuts for households earning more than US$250,000. Republicans insisted that all the tax cuts be extended, for rich and poor alike.
"I have not been able to budge them," Obama said at the televised news conference.
Without a compromise, he said, 2 million unemployed people "may not be able to pay their bills, and tens of millions of people who are struggling right now are suddenly going to see their paychecks smaller" because of income tax hikes.
Under the proposal cutting back Social Security payroll taxes, workers would pay a 4.2 percent tax rate instead of 6.2 percent - a US$120 billion tax cut for workers, starting on January 1.
The package would continue other programs such as enhanced tuition tax credits and tax breaks for businesses that hire new workers. It would impose a 35 percent federal estate tax, but each spouse could exempt up to US$5 million from taxation.
Under current law, the estate tax, which was repealed for 2010, is scheduled to return next year with a top rate of 55 percent.
The lower estate tax has emerged as the biggest sticking point among House Democrats.
House Democratic leaders say the package is tilted too much in favor of the wealthy, putting Obama on the defensive for striking a deal that is picking up support among lawmakers and business groups.
Some Democrats are unhappy that Obama agreed to extend expiring tax cuts to all Americans, including high earners, and that he agreed to impose a lower estate tax on wealthy heirs. Both provisions are seen by many Democrats as giveaways to the rich that will do little to help the economy.
In return, Democrats would get extended jobless benefits for people who have been unemployed for long stretches.
Obama went on national television on Tuesday to say that compromise is necessary to prevent a massive tax increase that would hit taxpayers at every income level and to prevent millions of unemployed workers from losing jobless benefits. "This country was founded on compromise," the president said.
Despite their minority status, Senate Republicans last week blocked Obama's long-promised bid to end Bush-era tax cuts for households earning more than US$250,000. Republicans insisted that all the tax cuts be extended, for rich and poor alike.
"I have not been able to budge them," Obama said at the televised news conference.
Without a compromise, he said, 2 million unemployed people "may not be able to pay their bills, and tens of millions of people who are struggling right now are suddenly going to see their paychecks smaller" because of income tax hikes.
Under the proposal cutting back Social Security payroll taxes, workers would pay a 4.2 percent tax rate instead of 6.2 percent - a US$120 billion tax cut for workers, starting on January 1.
The package would continue other programs such as enhanced tuition tax credits and tax breaks for businesses that hire new workers. It would impose a 35 percent federal estate tax, but each spouse could exempt up to US$5 million from taxation.
Under current law, the estate tax, which was repealed for 2010, is scheduled to return next year with a top rate of 55 percent.
The lower estate tax has emerged as the biggest sticking point among House Democrats.
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