Domestic Taxes

Sen. Evan Bayh (D-Ind.) reiterated his support Wednesday to extend all of the Bush-era tax cuts while the economy continues to rebound. 

Raising taxes while the economy is still weak would lower consumer demand "at a time we want people putting more money into the economy," Bayh said this afternoon on MSNBC. 

Income tax rates should only be increased as part of a comprehensive deficit reduction package combined with enforceable spending restraints, he said.

"To just go out and raise taxes with no spending restraint, particularly during a recession, is just not the right time to do that," he said. 

Senate Minority Leader Mitch McConnell will press President Obama to extend the Bush tax cuts during a White House meeting on Thursday.

The meeting was scheduled to discuss which of Obama's nominations can be voted on before the August recess, but an aide to McConnell (R-Ky.) said the senator will also use the opportunity to push Obama on intensifying debate over the Bush tax cuts.

“While [McConnell will] discuss those appointments here in Washington, he will also raise his very real concerns about the looming tax hikes that will kill jobs outside the Beltway,” the aide said.

Obama will use the time to push McConnell to allow votes on his judicial nominees.

Senate Republicans went on the offensive again Tuesday as the battle heats up over whether to continue the 2001 and 2003 tax cuts. 

Although the debate over whether to extend the Bush-era tax cuts is expected to kick off in September, Republicans are already making the issue a major part of their election rhetoric. 

"It's clear that the administration and the majority is committed to raising taxes on the top two rates in the middle of a recession," said Senate Minority Leader Mitch McConnell (R-Ky.) today.

Raising those taxes would "capture 50 percent of small-business income and impact about 25 percent of the workforce in the middle of a recession," he told reporters. 

House Majority Leader Steny Hoyer (D-Md.) said it was his preference to address expiring tax cuts before the election, but acknowledged that it could slip until after the elections.

Hoyer suggested on Tuesday he agreed with Speaker Nancy Pelosi (D-Calif.), who said this weekend that she hopes that Congress will act to extend most of the tax cuts set to expire at the end of the year before the election, while letting income taxes on the highest earners tick upward.

"The timing on that, we may well consider that over the next four weeks from September 14 to October 8," Hoyer said of the expiring tax cuts during a conference call to promote Democrats' economic stewardship during the August recess.

Hoyer noted, though, that "it's also possible that we won't reach agreement on how to proceed" on the tax cuts, leaving the possibly politically bruising debate until the lame-duck Congress between the elections and when a new Congress is sworn in next January.

Democratic leaders and President Obama have pushed for extending the bulk of the tax cuts, but have said they would like to see taxes spring upward for individuals making more than $200,000 per year, and households earning more than $250,000 in a year.

Hoyer said that there was a "general consensus" among congressional Democrats on letting the high-end taxes appreciate, and said that the House didn't necessarily feel as though it had to wait to see how the Senate would proceed before acting on its own.

Republicans have made the taxes a major part of their election message, arguing that the increased taxes would disproportionately harm small-business owners who treat their company's income as their own. The pressure from the GOP on taxes could make for an even tougher time for vulnerable incumbent Democrats, who might not wish to be seen as raising any taxes in the middle of a recession.

"As if raising taxes on small businesses at the height of an economic recession isn’t enough, Leader Hoyer has now confirmed the Democrats’ secret plan to make them even more offensive to American families," said Paul Lindsey, a spokesman for the National Republican Congressional Committee (NRCC). "If these tax hikes are as much a ‘winning issue’ as Democrats say they are, why do they have to sidestep the will of voters in order to pass them?"

Updated 5:13 p.m.

House Majority Leader Steny Hoyer (D-Md.) said it was his preference to address expiring tax cuts before the election, but acknowledged that it could slip until after the elections.

Hoyer suggested on Tuesday he agreed with Speaker Nancy Pelosi (D-Calif.), who said this weekend that she hopes that Congress will act to extend most of the tax cuts set to expire at the end of the year before the election, while letting income taxes on the highest earners tick upward.

"The timing on that, we may well consider that over the next four weeks from September 14 to October 8," Hoyer said of the expiring tax cuts during a conference call to promote Democrats' economic stewardship during the August recess.

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Geithner is optimistic Congress will extend most tax cuts while ending those for the wealthiest taxpayers.

Republicans aren't likely to win a legislative battle to extend all of former President George W. Bush's tax cuts, a House conservative leader conceded Monday.

Rep. Tom Price (Ga.), the chairman of the conservative Republican Study Committee (RSC), acknowledged that the the Bush tax cuts, which are set to expire at the end of the year, won't be extended in their entirety, as GOP leaders have called for.

"No, I don't see it," Price said on CNBC when asked if there was any chance that all of the Bush tax cuts could be extended.

Republicans in the House and Senate, including members like Price, have pushed the Democrats in control of the House and Senate on taxes, warning voters during the summer campaign season that Democrats would raise taxes.

President Obama and congressional Democrats have said they wish to extend all of the Bush tax cuts with the exception of the breaks for households earning over $250,000 a year and individuals earning over $200,000 per year. Democrats would let those high-end tax cuts expire, a move that Republicans have attacked, reasoning that they would harm small-business owners who treat their company's income as their own.

The expiring tax cuts are setting up a pitched political battle over the tax rates this fall. House Speaker Nancy Pelosi (D-Calif.) said on Sunday that "it would be [her] hope" to hold a vote on the tax cuts — which would presumably let high-income tax rates rise — before Election Day. But holding that vote before what's expected to be a tough election for Democrats could put endangered incumbents and other centrist Democrats in a tough position on the issue of taxes.

Republicans are finding themselves in a bit of a tough situation of their own over the taxes, too, facing questions over how to pay for the hole in the budget that would be created by extended cuts. Extending allcraziness. They're going to increase taxes on virtually every single American, they're going to try to pass their national energy tax, and they're going to do some favors for unions — 'card-check,' facilitating union formation all across this country."

--Cross-posted from Blog Briefing Room. 

The Senate on Monday effectively postponed legislation providing more than $16.1 billion next year to state Medicaid programs.

The vote to table the bill was 95 to 0. 

The Medicaid proposal, part of a $26 billion proposal designed to help states weather a tough economy, ran into trouble Monday when the Congressional Budget Office estimated the package would add $5 billion to the budget deficit.

Democratic leaders say they'll tweak their proposal to pay the entire tab. A vote on the revised bill is expected as early as Wednesday. 

--Cross-posted from Healthwatch.

Businesses in the U.S. have hired more than 5 million workers this year who were unemployed for at least two months, making those employers eligible to receive more than $10 billion in total tax credits, according to a government study released Monday. 

The employers are eligible for the financial breaks under the Hiring Incentives to Restore Employment (HIRE) Act, which established tax exemptions and credits to encourage hiring in the private sector. 

The state-by-state hiring report released by the Treasury Department shows that, between February and June, U.S. business hired an estimated 5.6 million new workers who had been out of work for 60 days or more. If those 5.6 million employees remain employed for the rest of the year, their employers would be eligible for an estimated $6.2 billion in payroll tax savings. 

If 75 percent of the new hires remain employed for 52 weeks, their employers would receive another $4.2 billion in tax credits, bringing the potential tax savings to $10.4 billion, the report said.