Thursday, April 29, 2004

The House yesterday voted to permanently extend the 2001 tax relief for married couples, sending the bill to the Senate and kicking off what promises to be an election year of partisan wrangling over tax-related issues.

“The greatest error we could make would be to allow a tax increase on our families. This is the right bill, this is the right time,” said Rep. Jim Gerlach, Pennsylvania Republican and sponsor of the measure.

The provisions that are being made permanent were part of President Bush’s 2001 tax-cut package and are designed to eliminate what lawmakers call the marriage penalty, which results in many couples paying higher taxes than they would if they were single. Even though some House Democrats complained about the bill yesterday, it was approved overwhelmingly, 323-95, with 102 Democrats supporting it.

The bill — which applies to married couples, defined under federal law as opposite-sex couples — was the first in a series of measures that House Republican leaders will bring to the floor in the next month to permanently extend tax cuts set to expire at the end of the year. Two others would make permanent the $1,000 child-tax credit and the expanded 10 percent tax bracket for low-income persons.

The House will also consider legislation next week aimed at providing relief from the alternative minimum tax for many middle-class families.

Republicans hope enough Senate Democrats will feel pressured to support these bipartisan measures to get it through that chamber. But if that doesn’t happen, Republicans will have an issue to use against Democrats on the campaign trail this year, House Republican leadership aides said.

“If you provide tax relief for the families, they’ll use the money wisely and create new jobs,” Rep. Sherwood Boehlert, New York Republican, said yesterday. “We’ve got the right ticket to drive this economy forward if we provide much-needed tax relief.”

Some House Democrats said Republicans and Mr. Bush are being fiscally irresponsible by not paying for their tax cuts.

“We want tax relief, and we want it paid for,” said Rep. Jim McGovern, Massachusetts Democrat, who said that the economy is a mess and that 2.6 million jobs have been lost under the Bush administration.

“We are … borrowing the money and sending the bill to our children,” said Rep. Richard E. Neal, Massachusetts Democrat, adding that Republicans have “tax-cut fever” at a time when the money is needed for the troops in Iraq and Afghanistan.

One Senate Democratic aide said the House Republicans’ plan to continuously pass separate tax-relief bills this year is a “purely partisan” election-year strategy.

“It’s all about taking the vote,” the aide said. “They’re not interested in getting something done. They just want the issue.”

Yesterday’s bill permanently would extend the increase of the top income level eligible for the 15 percent tax bracket for married couples, as well as bump up the standard deduction that married couples who don’t itemize their taxes can claim. Without the bill, these benefits would begin to phase out in 2005 and expire completely in 2010.

Democrats said the Republicans weren’t going to include in the bill a permanent extension of higher income limits that allow more low-income married couples to qualify for the refundable earned-income tax credit. So Republicans modified their bill by voice vote yesterday to include this extension.

The Joint Tax Committee estimated the original bill would save taxpayers $96 billion over 10 years, and the modified bill could increase the savings to $105 billion.

House Democrats yesterday pushed an alternative bill — defeated 226-186 — that would have permanently extended the marriage-penalty relief, but also would have protected many married couples from the alternative minimum tax. It would have saved taxpayers about $207 billion over 10 years, but would have been offset by increasing taxes on the top 0.2 percent of households.

House supporters of Mr. Gerlach’s bill hope the Senate will approve it, but aren’t overly optimistic that will happen.

“If I’m a Senate Democrat, I would want to do what I can to hold this up. I wouldn’t want to give the president a victory,” one House Republican aide said.

Still, a Senate Republican leadership aide said Democrats probably won’t want to “mess around with a bipartisan extension of a highly popular” tax proposal.

Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican, said he’ll wait until the House passes all of their single-shot tax-relief bills and then act, likely crafting one larger tax-relief bill.

Another Senate Democratic aide said final decisions on whether to support the measure won’t be made for a while. But the aide echoed House Democrats, noting that a major factor will be whether they are paid for.

A House Republican leadership aide said yesterday’s bill and the three other tax-relief bills the House is planning to approve in coming weeks are popular enough, “that we should be able to put enough pressure on the Senate to get 60 votes.”

But even if it fails and Democrats vote against them or hold them up, “this is something we can revisit on the campaign trail,” another Republican aide said.

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