The US Congress passed an $858-billion Bill extending for two years all Bush-era tax cuts, sending the measure to President Barack Obama for his signature.
Before the House voted 277-148 for final passage on the tax-cut agreement, members defeated an amendment crafted by some Democrats to express their displeasure with the bill and especially with a Republican-backed estate-tax proposal.
Enough Democrats voted with House Republicans to accept the deal that Obama negotiated with congressional Republicans who gained scores of seats in last month’s election. Republicans said the bill would provide certainty about tax rates and would create jobs.
Failure to pass the bill would “cause grave economic harm and possibly send us back into a double-dip recession,” said Representative Eric Cantor, a Virginia Republican who will become majority whip in January.
The vote concluded a debate over the expiring tax cuts that dominated the 2008 and 2010 US election campaigns. As the renewed tax cuts will expire at the end of 2012 they are certain to be a focus of the next presidential campaign.
Majorities of both parties supported the bill. Voting in favour were 139 Democrats and 138 Republicans, while 112 Democrats and 36 Republicans voted against it. Eight lawmakers didn’t vote.
‘Income inequality’
“Wonderful,” said Representative David Obey, a Wisconsin Democrat who is retiring after 40 years, as he left the House floor for one of the last times in his career. “Just what we need: further exacerbate income inequality in this country.”
Treasury Secretary Timothy Geithner said in a statement that the tax plan was “good for growth, good for jobs.”
US stock-index futures were little changed this morning, with the Standard & Poor’s 500 Index at its highest level since September 2008, up 46.2 per cent since Obama took office and up 1.6 per cent since the tax deal was struck on December 7.
Many Democrats had insisted that the US couldn’t afford to keep the 2001 and 2003 tax cuts for family income exceeding $250,000 a year. Republicans demanded extension of the tax cuts, which expire on December 31, for all income levels.
The tax-cut plan extends through 2012 all Bush-era tax reductions on income, capital gains and dividends. It continues expanded unemployment insurance benefits through 2011, cuts payroll taxes by 2 percentage points during 2011 and lets businesses write off 100 per cent of capital investments between September 9, 2010, and December 31, 2011. Obama agreed on the plan with Republicans on December 6.
The legislation also extends dozens of expired and expiring tax breaks, including a research and development tax credit and a college tuition tax credit that was created in last year’s economic stimulus law.
Republicans said the measure would give businesses and individuals certainty that tax rates would not rise in January.
“This House — the people’s House — has a simple choice to make today: Raise taxes on families and small businesses or prevent a massive, job-killing tax increase from going into effect a mere 16 days from now,” said Representative Dave Camp of Michigan, who will become chairman of the tax-writing Ways and Means Committee next month.
House Democrats threatened last week to refuse to bring the Senate’s tax plan to the floor unchanged. They focused much of their ire on the estate-tax provision, saying it benefits the wealthiest Americans at the cost of a higher budget deficit.
