The House is unlikely to extend President George W. Bush’s cuts for taxpayers earning more than $250,000, Majority Leader Steny Hoyer (D-Md.) said Wednesday.
Hoyer said tax cuts for those making under $250,000 were likely to be extended.
“I think we will continue the middle-class [tax cuts] but the brackets above $250,000 will not be continued,” Hoyer said.
Allowing the tax breaks to expire at the end of the year will spark election-year criticism that Democrats are raising taxes. Congress approved the tax cuts in 2001 and 2003.
Democrats are worried about losing seats in November’s midterm election, but Hoyer discounted the idea of his party losing seats solely because of a tax increase.
“The fact of the matter is we believe we have to pay our bills,” he said. “We don’t believe we can pay our bills on the backs of middle-income people who are struggling right now. So those of us who have more will have to pay a little more.”
Hoyer’s comments track pledges made by President Barack Obama, whose budget, released this week, would allow the tax cuts on those making more than $250,000 to expire.
But that could make centrist Democrats nervous.
Two freshman Democrats just last month had called on Obama to include in his budget an extension of all of the 2001 and 2003 tax cuts for two years.
“Allowing these tax rates to expire during this recession runs the risk of curtailing economic expansion just when it begins to pick up and could lead to a ‘double-dip’ recession,” Reps. Bobby Bright (D-Ala.) and Mike McMahon (D-N.Y.) wrote in a January letter to Obama.
The decision not to extend tax cuts for wealthier taxpayers will draw sharp criticism from members who believe businesses taxed at individual rates will be affected negatively by the increase at a time of economic uncertainty.
“I think there is certainly significant resistance to the idea that we undo the ’01, ’03 tax cuts while we’re still in a very weak recovery and still very high unemployment," said Rep. Artur Davis (D-Ala.), who is running for governor of Alabama.
“My sense is this is the wrong time to be raising taxes on small businesses,” he said.
Other Democratic lawmakers acknowledged a political risk in raising taxes while companies struggle to maintain a profitable bottom line.