House Ok’s Tax Cuts and Fast-Track Tax Reform PlansAugust 8, 2012
Just prior to the start of August recess, the House approved two-Republican sponsored bills, one that would temporarily extend the Bush-era tax cuts for taxpayers at all income levels and another that would provide expedited procedures for consideration of overall tax reform in 2013.
First, on Aug. 1, the House voted 256-171 to approve the Job Protection and Recession Prevention Act of 2012 (H.R. 8), which would extend for one year 2001 and 2003 tax provisions for all taxpayers. Other provisions included in the House passed bill: keep the estate tax at current levels of a 35 percent top rate and $5 million exemption for 2013; extend the repeal of limitations on personal exemptions (PEP) and itemized deductions (Pease) through 2013; and increase the exemption amount for the individual alternative minimum tax (AMT) to $50,600 for single filers and $78,750 for married filers for 2012, and to $51,150 for single filers and $79,850 for married filers in 2013.
One Republican, Tim Johnson (Ill.) voted against the plan, and 19 Democrats voted in favor of the proposal. The measure does not include revenue offsets, and would reduce the federal deficit by $403 billion over ten years, according to estimates by the Joint Committee on Taxation.
That same day, the House rejected by a vote of 170-257, a Democratic substitute amendment offered by Ways and Means Committee ranking member Sander Levin (D-Mich.) which would have extended the current tax cuts only for joint filers with income below $250,000 and single filers with income below $200,000.
The following day, the House approved, by a vote of 232-189, H.R. 6169, the Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012, that would establish an expedited process for Congressional consideration of tax reform in 2013. Under rules approved by the House, H.R. 6169 was incorporated into H.R. 8.
The White House issued statements indicating that President Barack Obama would veto H.R. 8 and the House proposal for an expedited tax reform process.
It remains uncertain how Congress may resolve differences between the House and Senate on proposals to address the scheduled expiration after 2012 of current individual tax rates. The Senate on July 25 voted 51 to 48 to approve the Middle Class Tax Cut Act of 2012 (S. 3412), which generally would extend for one year current individual tax rates for individuals with income below $200,000, and joint filers with income below $250,000. The Senate rejected, by a vote of 45 to 54, a proposal by Senate Minority Leader Mitch McConnell (R-Ky.) and Finance Ranking Member Orrin Hatch (R-Utah) to extend 2001 and 2003 tax provisions temporarily for all taxpayers.
The dueling proposals mean Congress broke for the August recess at a stalemate, which will allow both parties to make their cases on the campaign trail, but are not poised to settle anything until after November’s elections.