Domestic Taxes

Rep. Gerry Connolly (D-Va.) told The Hill on Tuesday that the Senate is looking at temporarily extending all the tax cuts enacted by President George W. Bush. 

"I think there is some chance that the Senate will provide for a temporary extension of all of the tax cuts," he said. 

Connolly is not a part of the tax-writing Ways and Means Committee, but said there is talk of a one-year extension. He did not know if its cost would be offset. 

Continuing the upper-brackets for 10 years would cost approximately $700 billion. But it is highly unlikely that lawmakers would pass a long-term extension. Some have said a one-year extension would cost roughly $40 billion, while others contend that figure is too low. 

Senate Finance Committee Chairman Max Baucus (D-Mont.) will likely take the lead on whatever moves in the Senate. 

"Sen. Baucus introduced a bill in March of 2009 to make the middle-class tax cuts permanent," a committee aide told The Hill. "He said when he introduced that bill that it should be a starting point in the conversation in Congress about how to handle the expiring rates." 

The so-called Bush tax cuts are slated to expire at the end of the year. But the sluggish economic rebound has created some concern that allowing those breaks to expire could hinder any chance for a robust recovery.

"The problem is the recovery has slowed down, and you don't want to do anything that is going to have a deleterious effect on what growth we are experiencing," Connolly said. 

House leaders recently have said that the Senate would take the lead on extending the Bush tax cuts. They have also repeatedly called for ending the breaks benefiting individuals earning more than $200,000 and couples making over $250,000 while extending relief for the middle class.

Connolly said the only way to continue the tax breaks for the wealthy is for the Senate to move first. 

"I've been told by some in leadership that [extending tax cuts for the wealthy] is simply not going to happen on our side," he said. "We won't have that option."

Connolly supports a temporary extension of all the Bush tax cuts, but would like to see their cost offset. 

"I never thought I'd say these words, but our hope is in the Senate," he said. 

As the debate over the expiring Bush-era tax cuts heats up, there are echoes from the past as Democrats and Republicans dig in on whether to raise taxes on the nation's wealthiest Americans.

In a blog post Monday, the Tax Policy Center looked back to 1993 when a similar debate over deficit reduction proposals emerged during the early years of the Clinton administration.

President Obama, like Clinton did 17 years ago, is suggesting raising taxes on those who make the most, the top 2 percent of earners. 

Republicans are providing a nearly identical answer to that call, a tax increase on the nation's wealthiest would affect small businesses, kill jobs and bring the economic recovery to a halt. 

President Obama on Monday used a speech at a Democratic National Committee fundraiser in Austin, Texas, to bash Republicans who wish to continue the tax policies of President George W. Bush. Some contend those initiatives contributed mightily to turning record surpluses into historically high deficits.

President Obama pledged $60 billion, saved by overhauling the student loan system, to lead the world in college graduation rates by 2020.

Raising the nation's education level is "how we'll lead the global economy this century, just like we did the last century," Obama said Monday during a trip to Austin, Texas.  

"Instead of handing over $60 billion in subsidies to big banks and financial institutions, over the next decade, we're redirecting that money to you, to make college more affordable for nearly 8 million students and families across this country," Obama said. "Eight million students will get more help from financial aid because of these changes."

Consumer taxes for retail sales items, gas and cigarettes continue to climb as states grapple with budget shortfalls that show little sign of improving, according to a report by tax and accounting firm CCH. 

The report found that five states have increased their tax on gasoline, another five have increased their sales tax and 11 states have increased their tax on cigarettes. The District of Columbia has recently joined North Carolina in increasing taxes in all three areas. 

Shortly before leaving town for the August break, Sen. Jeff Bingaman (D-N.M.) introduced legislation enabling workers to automatically invest in IRA plans. 

The Automatic IRA Act of 2010, allows employees at companies that do not sponsor a retirement plan to be automatically enrolled in IRAs at their workplace. 

Voters favor tax breaks, but are ambivalent about breaks benefiting the wealthy, according to a new poll.

In a letter to Senate Finance Chairman Max Baucus (D-Mont.) on Friday, Republicans asked for a September meeting.

Nominee Mary Smith, tapped to lead the Justice Department's Tax Division, was sent back to the White House after the Senate failed to act. 

The Senate for the second time sent the nomination back to President Obama after lawmakers decided not to hold it during the August recess. 

Smith's nomination has languished for more than a year over Republican concern that she doesn't have enough tax law experience. The president will now have to renominate Smith. 

Senate Finance Chairman Max Baucus (D-Mont.) applauded a Thursday announcement by the Internal Revenue Service that it will no longer provide a taxpayer's debt indicator to tax preparers and financial institutions that provide refund anticipation loans (RALs).

High interest rates charged on the RALs have led Baucus to push for a discontinuation of the information. 

"Refund Anticipation Loans charge taxpayers sky-high interest rates, 36 percent or more for access to their own money," Baucus said today in a statement. "It is reprehensible that banks would use our tax system as a profit center to exploit taxpayers and today’s announcement takes that problem head on."