House Democrats met Thursday and overwhelmingly voted to block the Bush tax cut extension compromise announced earlier in the week by President Obama and Republican congressional leaders.
House Democrats were later reported to be planning to introduce several changes in the deal, including in the estate tax, which has provoked particular outrage among Democrats. The White House announced earlier in the week that under the deal the estate tax rate would go to 35 percent next year on estates worth $5 million for individuals and $10 million for couples. It was scheduled to return next year, after being effectively zero this year, to a rate of 55 percent with a $1 million exemption. Sen. Jon Kyl, R-Ariz., who has pushed for the estate tax deal, said it would not be changed.
House Speaker Nancy Pelosi, D-Calif., issued a statement outlining the House Democratic Caucus's position. “In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written," she said. "We will continue discussions with the President and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote. Democratic priorities remain clear: to provide a tax cut for working families, to create jobs and economic growth, to assist millions of our fellow Americans who have lost their jobs through no fault of their own, and to do this in a fiscally sound way.”
Meanwhile, the Senate planned to push forward on a plan to bring the measure to the Senate floor on Monday with a host of other tax extender items. However, some Senate leaders who have typically been key allies of Obama, including Sen. Charles Schumer, D-N.Y., vowed to block tax cuts for millionaires and billionaires, provoking the ire of White House officials, according to the Washington Post.
Obama is reportedly also considering an overhaul of the Tax Code next year to lower income tax rates yet also raise revenues, according to The New York Times. The aim is to get rid of the many deductions, exemptions and credits and simplify the Tax Code. The bipartisan deficit commission recommended streamlining the Tax Code and reducing the number of tax brackets in a report last week.
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