Voters in November will have lots of issues on their plate when sizing up candidates for Congress. Health care, immigration and bailout responsibilities are all hot-button matters. Now add one more: Expiration of the Bush tax cuts.
The New York Times says a mammoth battle is shaping up in the Obama administration and among Democrats in Congress who want to let the cuts expire this year. The tax cuts impact families who earn more than $250,000 a year.
The newspaper says the issue will return to the top of Washington’s agenda this year when lawmakers return in September. The tax fight should serve as a proxy for the bigger political clashes of the year, according to The Times.
The main elements of the 2001 and 2003 tax cuts are set to expire this year. Unless Congress acts, about 2 percent of American households will pay more.
The top two income tax rates would revert to 36 and 39.6 percent.
The estate tax on inherited wealth gradually was phased out. In 2003, the first $1 million of an individual’s estate was not taxed. The limit rose in stages until it was phased out this year.
President Obama wants to restore the 2009 levels, meaning inheritances of more than $3.5 million for individuals and $7 million for couples would be taxed at a 45-percent rate.
The issue may start first in the Senate. One scenario has House members renewing the tax cuts for the middle class just before the November election. Democrats could use the measure as leverage to show they are helping 95 percent of American taxpayers.