Senate rejects GOP plan to extend Bush-era tax rates in 45-54 vote

The Senate rejected the Republican proposal for extending the Bush-era tax rates in a straight up-or-down vote Wednesday.

GOP Sens. Susan CollinsSusan CollinsThe Trail 2016: Meet and greet and grief Senators press Obama education chief on reforms GOP senator: Trump endorsement could depend on VP MORE (R-Maine) and Scott Brown (Mass.) joined Democrats in voting against the GOP plan, which would have extended the Bush-era tax rates and other current tax policies. Brown faces a difficult reelection battle this fall. 

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Senate Majority Leader Harry ReidHarry ReidOvernight Finance: Obama signs Puerto Rico bill | Trump steps up attacks on trade | Dodd-Frank backers cheer 'too big to fail' decision | New pressure to fill Ex-Im board Iowa poll: Clinton up 14 on Trump, Grassley in tight race with Dem Lynch meeting with Bill Clinton creates firestorm for email case MORE (Nev.) and Democrats had only one defection — Sen. Mark PryorMark PryorEx-Sen. Kay Hagan joins lobby firm Top Democrats are no advocates for DC statehood Ex-Sen. Landrieu joins law and lobby firm MORE (Ark.). Like Brown, Pryor faces a tough reelection bid. 

Vice President Biden made a rare appearance as the Senate's presiding officer in case his tie-breaking vote was needed to help Democrats pass their own tax plan in a subsequent vote. The Democratic plan would extend only the Bush-era rates on families with income up to $250,000.

Senate leadership had struck a deal earlier in the day to hold two up-or-down votes on both the Republican tax plan, the Tax Hike Prevention Act, and the Democrats’ Middle Class Tax Cut Act.

Democrats said the Republican plan, S. 3413, just protected the wealthiest Americans, while Republicans argued the Democratic plan represented a tax hike on some households.

“The Senate Democrat plan, which raises taxes on a million small-business owners at a moment when we’re counting on them to create jobs, raises taxes on thousands of family farmers and small-business owners grieving the loss of a loved one, leaves a middle-class tax hike in place, and reforms nothing,” Senate Minority Leader Mitch McConnellMitch McConnellOvernight Healthcare: Dems dig in over Zika funding Business groups ramp up pressure to fill Ex-Im board Senate Dems: No August break without Zika deal MORE (R-Ky.) said Wednesday.

Despite Republican objections, the Democrats’ S. 3412 is expected to pass by a narrow margin, but will carry little weight since tax bills have to originate in the House and House Republicans are unlikely to accept the Democrats’ bill.

“Republicans are interested in protecting millionaires and billionaires from paying one penny more,” Sen. Patty MurrayPatty MurraySenate Dems: No August break without Zika deal Senators press Obama education chief on reforms Overnight Finance: Senate sends Puerto Rico bill to Obama | Treasury, lawmakers to meet on tax rules | Obama hits Trump on NAFTA | Fed approves most banks' capital plans MORE (D-Wash.) said Tuesday. “Disagreement on tax cuts for the rich should not stop tax cuts for the middle class … but Republicans care about extending those tax cuts for the rich above all else.”

The Democrats’ bill also includes extensions of the earned-income tax credit, child tax credit and opportunity tax credit for college tuition.

The Republican-controlled House will vote on tax measures next week and is likely to pass a similar version to the Senate GOP’s bill. The Senate rejecting that measure sends a clear message to the House that it can’t pass in both chambers, leaving the ball in the House’s court as to whether they are willing to extend tax breaks for just the middle class.

McConnell on Wednesday morning agreed to holding the two up-or-down votes on the competing tax proposals. He said the arrangement would force vulnerable Democratic senators to vote on the merits of each plan and not hide behind procedural votes. 

“By setting these votes at the 50-vote threshold, nobody on the other side can hide behind a procedural vote while leaving their views on the actual bill itself a mystery, a simple mystery to the people who sent them here,” McConnell said Wednesday morning.

The tax votes are only the first salvo in an election year debate about how to avoid the impending fiscal cliff of tax increases and automatic spending cuts agreed to in last year’s debt-ceiling deal.

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