Almost every American knows that the Bush era tax cuts are set to expire at the end of this year unless Congress does something about it. Democrats want to pass a bill extending the tax cuts for individuals earning up to $200,000 and married couples earning up to $250,000. The Republicans, on the other hand, want the tax cuts to extend to all individuals, no matter how much money they earn. So far, so good. Each side’s proposal is simple enough to follow.
But not so fast. The Senate plan, written by Sen. Orin Hatch of Utah, eliminates additional tax breaks for the middle class that were included in the 2009 stimulus package. Those tax breaks helped struggling families make it through the Recession and the difficult months that followed. But not for long if the Republican Senate gets its way.
The Senate is scheduled to vote today. The bill offered by the Democrats will come up first. The Democrats need 60 votes to pass the Bush era tax cuts for the middle class, i.e, for individuals who earn up to $200,000 and couples who earn up to $250,000.
The irony is that the Republicans need the Democrats to pass their version of the bill before they can vote on the Orin Hatch plan.
The Republican plan, which seeks to extend all of the Bush tax cuts, would result in tax breaks for 2.7 million of America’s wealthiest families. That translates to a tax cut of $74,505 per average millionaire. The Democrats’ plan, would give those same millionaires a tax cut of $7,055.00 in 2013. (Both figures are according to estimates prepared by the Congress’ Joint Committee on Taxation).
Lower income families, however, who have benefitted from four specific tax breaks included in the 2009 stimulus package, will lose big under the Republic plan. For example, the eligibility threshold for the child tax credit would skyrocket next year from $3,000 to $13,300 for struggling families. That provision alone could cost middle class families as much as $1,500 per year. A second provision would gut significant tax breaks for middle class families with children in college, lowering the deduction from $2,500 to $1,800 and scrap altogether a provision that makes the first $1,000.00 of the tuition credit refundable.
I find it disheartening that Republicans who steadfastly support across-the-board tax cuts would offer such a cold-blooded plan. Many Americans understand the hardship and anxiety that comes with being on unstable financial footing. The Republicans are pursuing policies that will not only ensure many families stay on shaky ground, but will simply pull the rug out from underneath them. Here in New Jersey, a state that ranks 48th out of 51 (The Department of Labor Statistics includes the District of Columbia) in percentage unemployed, every extra dollar is vital to middle and lower income families.
Stay tuned for the results of the Senate vote.