The House approved GOP legislation late Wednesday that would extend all current tax rates for another year, and also turned away a Democratic bill that would have allowed rates to rise for higher income earners.
The Job Protection and Recession Prevention Act was approved in a 256-171 vote that saw 19 Democrats vote with Republicans, highlighting division in the Democratic party over taxes. Only one Republican, Rep. Tim Johnson (Ill.), voted no.
Democrats voting in favor of the bill were Reps. John Barrow (Ga.), Sanford Bishop (Ga.), Dan Boren (Okla.), Leonard Boswell (Iowa), Ben Chandler (Ky.), Gerry Connolly (Va.), Jim Costa (Calif.), Mark Critz (Pa.), Henry Cuellar (Texas), Joe Donnelly (Ind.), Larry Kissell (N.C.), Dave Loebsack (Iowa), Jim Matheson (Utah), Mike McIntyre (N.C.), Jerry McNerney (Calif.), Bill Owens (N.Y.), Collin Peterson (Minn.), Mike Ross (Ark.), and Tim Walz (Minn.).
With the House vote, both chambers have now spoken on tax policy, which will allow both parties to make their case on the campaign trail. Last week, the Senate approved a bill that would let rates rise on annual individual income above $200,000, and annual family income above $250,000.
The vote will also play into the presidential race between Republican Mitt Romney and President Obama, who championed the call for Bush tax rates on higher-income households to be terminated.
They also noted that less than two years ago, many Democrats agreed to extend all the Bush-era tax levels, citing the harm any tax hike might do to the struggling economy.
"Two years ago, the president said we shouldn't raise taxes in this time of a slow economy. I agreed with the president," House Speaker John Boehner (R-Ohio) said during debate. "And here we are, some 18 months later, economic growth is actually slower than it was when Obama made those remarks, and yet the President wants to go out and raise taxes on the so-called rich."
Boehner said that while Democrats claim the bill would raise taxes only on the wealthy, their proposal would hit many small business owners that would otherwise be able to create jobs.
"Let me tell you who the so-called rich are. About a million of those people that you want to increase taxes on are small business owners," Boehner said.
Boehner and other Republicans cited an Ernst & Young study saying that more than 700,000 jobs would be lost if taxes were raised on people with higher incomes, and said the key difference between the GOP and Democratic bill is that only their bill creates jobs.
"The question is, which path will our country take," House Ways & Means Committee Chairman Dave Camp (R-Mich.) said. "The Democrats' path that includes tax hikes that will cause small businesses to lose 700,000 jobs, or the Republican's tax reform path that will make the tax code simpler and fairer, and led to the creation of more than one million jobs in the first year?"
But Democrats said Republican demands for a full extension of all tax levels is effectively blocking extended middle class tax relief that passed the Senate. Democrats argued Republicans continue to favor the wealthy. Rep. Lloyd Doggett (D-Texas) said the Ernst & Young study was "bought and paid for" by people who would benefit from keeping the higher income tax cut in place.
"By refusing to vote for the Senate-passed bill, House Republicans are giving more tax breaks to the richest two percent, tax breaks they don't need and we can't afford," Minority Leader Nancy Pelosi (D-Calif.) added.
"Designed to fail. That's what this bill is," Minority Whip Steny Hoyer (D-Md.) said. "Today we could embrace the agreement that the Senate has come to and tell the 98 percent, 'you're safe.'"
"Everyone in this body agrees that we should extend the middle class tax cut. The Senate passed a bill that does just that. The president is ready to sign it this week," Ways & Means ranking member Sandy Levin (D-Mich.) said. "So the question is, if everybody agrees that we should continue the middle-class tax cut, why don't we come together?"
— This story was updated at 6:59 p.m.