Administration officially backs Senate Democratic tax plan

The statement comes as both chambers are getting ready to hold tax votes that are more about setting themselves up politically for the November election and for the upcoming lame-duck debate. Policy decisions, at least for the time being, on the Bush-era rates are likely to be punted off until at least the post-election session of Congress.

ADVERTISEMENT
On Wednesday, the Senate is scheduled to vote on the Democratic plan, and Minority Leader Mitch McConnell (R-Ky.) said that he would allow majority votes on both the Republican and Democratic plan.

The House is expected to vote next week on their plan, and a measure that would look to force tax reform in 2013.

In its statement, the administration reiterated the Democratic argument that Republicans were holding up tax relief for the middle-class, in an effort to ensure tax cuts for the wealthiest.

The White House’s National Economic Council released a study on Tuesday that said that 114 million middle-class families would be hit with a tax hike if Congress doesn’t act by the end of the year.

In addition to extending-Bush era rates on the first $250,000 of household income, Democrats also want to extend expansions of tax provisions like the Earned Income Tax Credit and the Child Tax Credit.

The Senate Republican plan, from Sen. Orrin Hatch (Utah), the ranking member at the Finance Committee, does not extend those provisions.

“Rather than continuing the unaffordable and unneeded tax cuts for the highest-income 2 percent of Americans, middle-class tax relief, such as S. 3412, asks the best off to contribute to deficit reduction by paying income taxes at the same rates as during the 1990s, when the economy created nearly 23 million new jobs and the largest budget surplus in American history,” the administration said.

Republicans have said that, given the sluggish state of the economy, no one’s taxes should rise at year’s end, and that Democrats are pushing to raise taxes on thousands of small businesses.

A slew of business groups -- like the U.S. Chamber of Commerce, the National Federation of Independent Business and the National Association of Manufacturers -- have all announced their opposition to the Democratic plan.

McConnell has also, in recent days, pushed for a vote on a tax proposal that more closely tracks with what President Obama has proposed.

The Senate Democratic plan, for instance, calls for lower rates on dividends than what Obama has called for in the past.