WASHINGTON — The Republican-controlled U.S. House of Representatives on today passed a largely symbolic plan to extend all expiring individual income tax cuts, leaving a deep rift over tax policy unresolved until after November’s elections.
The Republican measure, passed largely along party lines but with the help of 19 Democrats, would extend all current low individual tax rates set to lapse at year-end, a contrast to a rival Democratic bill passed by the Senate that would raise some tax rates on the wealthiest.
The dueling votes highlight a bitter partisan divide ahead of the elections, with each vote becoming grist for competing campaign ads, pronouncements by the Republican and Democratic campaign committees and political talk shows.
“I know we’re in an election year, but my goodness, raising taxes at this point, in this economy, is a very big mistake,” House Republican Speaker John Boehner said during the debate.
Republicans, including presidential hopeful Mitt Romney, are highlighting sluggish economic growth ahead of the elections. Democrats say the issue is one of tax fairness.
“Regular folks pay more so folks like Donald Trump and Mitt Romney can get yet another tax break,” said Xavier Becerra, a member of the House Democratic leadership.
At issue are the tax cuts enacted under former President George W. Bush in 2001 and 2003 that are due to snap back to their prior levels at the end of the year.
Where Congress disagrees is on tax rates for the wealthy. The Senate bill extends current rates on income up to $250,000 and restores higher rates on income above that level. The House bill extends all the rates.
The rates are a key part of the “fiscal cliff” that is likely to confront Congress after the election, when hundreds of billions in tax cuts expire just as more than $100 billion in automatic spending cuts start to take effect unless Congress acts.
Also in the mix: an expiring payroll tax cut likely to lapse and expiring payment rates for Medicare doctors.
Some economists say that failure by Congress to act on these looming threats could stifle a weak economic recovery and start a new recession.
The House on Thursday will vote on a Republican proposal to speed up an overhaul of the entire tax code in 2013, a concept both parties support.
But that blueprint slashes tax rates to a maximum rate of 25 percent for the highest earners, and restricts revenue to between 18 percent and 19 percent of gross domestic product, ideas most Democrats oppose.
Congress will have little time for substantive action before the Nov. 6 presidential and congressional elections. At the end of this week, lawmakers depart for a five-week recess.
When they return, they will be in session for only three weeks before the Nov. 6 election and must pass a stop-gap funding measure to avoid a government shutdown after the Sept. 30 end of the fiscal year.
In a rare show of bipartisanship, tax-writers in the U.S. Senate earlier on today agreed to a deal to renew some expired and about-to-expire tax breaks for business and individuals.