Vulnerable House members face tough votes on competing tax bills

Vulnerable House lawmakers will face tough decisions next week when two competing tax bills come to the floor, and some Democrats are indicating they will back a Republican plan to extend all rates for another year.

Democratic leaders are expected to offer the proposal that passed the Senate on Wednesday, which extends the George W. Bush-era tax rates only for family income up to $250,000, as an alternative to the GOP measure.

Two House Democrats — Reps. Collin Peterson (Minn.) and Joe Donnelly (Ind.) — said they would vote with Republicans to extend all the tax rates through 2013. A third, Rep. Henry Cuellar (Texas), said he was leaning toward supporting a full extension as well.

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Peterson, the top Democrat on the House Agriculture Committee, told The Hill that he would likely vote for both plans even though his preference would be to extend all Bush-era rates and then do tax reform in 2013.

“I just am in the camp that we shouldn’t be raising taxes right now, with the economy where it is,” Peterson said. “I don’t want to get into the fight between the groups.”

In 2001, Peterson was one of 28 Democrats to vote to originally lower income tax rates to their current levels.

Donnelly is in a tough race for Senate in Indiana. “Given our continued economic challenges, now is the time to keep tax rates low,” he said in a statement. “The last thing our economy can afford is more uncertainty as the fiscal cliff approaches.”

Several other Democrats told The Hill they were still weighing whether to support the GOP bill, including Reps. Gerry Connolly (Va.), Ron Barber (Ariz.) and Shelly Berkley (Nev.), a Senate candidate.

Both parties are targeting vulnerable members over the votes, and Republican aides note that there are 89 House Democrats still serving who backed the December 2010 deal that fully extended the Bush tax rates for two years.

Democrats may have an easier time limiting defections on the Senate proposal. While Republicans have labeled the bill a “small business tax hike,” Democrats have argued that Congress should simply approve a policy that has broad bipartisan support — preventing a tax hike on the middle class.

“We should pass that now, and save the argument over whether we increase taxes on the richest Americans for another day,” said Rep. Chris Murphy (D), a Senate candidate in Connecticut.

Connolly said of the Democratic proposal: “That vote in and of itself causes me no problem at all. The question is, what do I do about the other vote?”

Several Democrats said they wanted to see how the Republican bill treats other provisions in the tax code, such as the estate tax.

Like Senate Republicans, the House GOP is proposing to extend the current estate tax parameters — 35 percent top rate and an indexed $5 million exemption — for another year.

Congressional Democrats are generally more divided on the issue, with proposals to both extend current levels and return to less generous 2009 ones.

Another point of contention for Democrats is the threshold at which taxes would rise. While President Obama and Senate Democrats have stuck to the $250,000 line, Connolly and other House Democrats believe it should be set at $1 million — a number that both Sen. Charles Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) have supported in the past.

Rep. Sandy Levin (D-Mich.), the ranking member on the tax-writing Ways and Means Committee, said House Democrats would throw their full weight behind the Senate bill, and tossed aside the idea that defections could dilute the Democratic message.

Levin noted that, against some predictions, Senate Democrats only lost two votes from the caucus for their tax bill. Sens. Joseph Lieberman (Conn.), an Independent who caucuses with Democrats, and Jim Webb (Va.), who is retiring, voted with Republicans.

“What was surprising to some was that the Democrats held together. We’re going to hold together,” the Michigan Democrat said. “Losing two people only accentuates our basic unity.”

Republicans expect to have nearly unanimous support for their proposal. Rep. Frank Wolf (R-Va.), a critic of anti-tax activist Grover Norquist, told The Hill he would back the GOP plan. Another frequent defector, Rep. Walter Jones (R-N.C.), said he was “open to both” plans.

One Republican who might vote against the party is Rep. Steve LaTourette (Ohio), a close ally of Speaker John Boehner (R-Ohio) who led the push to pass a modified Simpson-Bowles deficit plan as a budget substitute earlier this year. The Simpson-Bowles plan assumed the expiration of the Bush tax rates for the wealthy, and LaTourette has said he would oppose further tax cuts that add to the deficit.

The budget modeled on the Simpson-Bowles plan garnered only 38 votes in the House, but its treatment of the tax rates for high earners could provide cover for Blue Dog Democrats — who often vote against their party — to oppose the GOP plan.

At the same time, Sen. Mark Pryor (D-Ark.), cited the deficit plan in explaining his decision to support both the Democratic and Republican tax plans on Wednesday.

“I don’t believe the American people should be punished through higher taxes because Republicans and Democrats can’t work out a sensible solution on tax reform,” he said. “Both measures before the Senate extend tax cuts to middle class families and patch the alternative minimum tax. We should extend these cuts as a bridge to comprehensive tax reform.”