Nov. 16 (Bloomberg) -- Dick Durbin of Illinois, the Senate’s No. 2 Democrat, said he is “not very” optimistic that the Bush-era tax cuts will be extended at this point.
Durbin said a preliminary discussion yesterday between Senate Majority Leader Harry Reid, and Mitch McConnell, the chamber’s top Republican, “did not go well.”
Durbin and other Senate Democrats today said the caucus hasn’t discussed how to proceed with legislation to prevent lower tax rates on income, capital gains, and dividends from expiring as scheduled on Dec. 31.
“I don’t even know what the options are at this moment,” said Washington Senator Maria Cantwell, a Democrat who serves on the tax-writing Finance Committee.
President Barack Obama has invited congressional leaders to the White House on Nov. 18 to discuss alternatives. Obama and most Democrats want to extend lower tax rates on only the first $200,000 of income for individuals and $250,000 for married couples filing jointly. Congressional Republicans say they want tax cuts to be extended for all Americans, including those with higher incomes.
Senate Finance Committee Chairman Max Baucus, a Democrat, said he’s “optimistic” that Congress will resolve its differences “because it is the right thing to do.”
Baucus said he didn’t know exactly how an agreement would be reached. “There are a kajillion ideas floating around,” he said.
Michigan Representative David Camp told a meeting of business tax lobbyists today that members of his party would fight efforts to extend tax breaks for middle-income households for a longer period than for richer Americans.
Such a proposal, advanced by some Democrats, “is a terrible idea and a total non-starter,” Camp, who is in line to chair the House Ways and Means Committee next year, told the Tax Council.
Unless Congress acts, marginal income tax rates will rise across the board, tax credits that benefit families will be slashed, and rates on capital gains and dividends will increase. A federal tax on estates worth more than $1 million also will be resurrected after expiring for 2010.
Clint Stretch, managing principal at the consulting firm Deloitte Tax LLP in Washington, said expiration of all of the Bush-era tax cuts would add $2,600 annually to the tax burden of a median-income family earning about $70,000 a year.
--Editors: Jodi Schneider, Robin Meszoly
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