Washington, DC — Senate Democratic Leader Harry Reid released the following statement on the Republican Congress’s failure to extend middle class tax cuts. This failure will raise taxes on hard-working men and women across America by leaving them without important tax deductions this year. A Democratic Policy Committee report on Republican efforts to block tax extenders and raise taxes on hard working Americans is attached following this release.
“After nearly two years of giving gifts to big oil, handing out favors to drug companies and lavishing no-bid contracts on Halliburton and other political allies, the Do Nothing Republican Congress outdid itself last week by raising taxes on the middle class and on businesses. The Republicans’ refusal to extend non-controversial tax cuts for hard working families is but the latest example of why America needs a new direction.
“Middle class and business tax cuts that have expired include critically important tax benefits, such as deductions for college tuition, state sales tax, and the out-of-pocket expenses for classroom supplies paid by teachers. They also include provisions for businesses to invest in research and development in the U.S. and to hire individuals trying to lift themselves off of the welfare rolls. According to the IRS, more than 19 million taxpayers qualify for this tax relief.
“On five separate occasions, Democrats tried to pass this middle-class tax relief before Congress adjourned for October. On each occasion Republicans blocked our efforts because, in the words of the Chairman of the Senate Finance Committee, ‘my own Republican leadership wants to use the [extender] bill as a sweetener, so-called sweetener, for votes for death tax relief at some future point.’ It is a disgrace that Congressional Republicans would threaten millions of Americans with a tax increase in an attempt to extort irresponsible estate tax hand outs to 8100 of the richest families in America.
“America needs a new direction, one that puts the interests of the American people ahead of special interests.”
REPUBLICANS RAISE TAXES ON MILLIONS OF MIDDLE CLASS FAMILIES AND BUSINESSES BY BLOCKING DEMOCRATIC PROPOSAL TO EXTEND TAX CUTS
September 26, 2006
“That’s one way of saying they’re going to raise your taxes because, you see, if you don’t extend the tax cuts, your taxes go up.” (President Bush, 9/21/06)
These were President Bush’s words at a campaign event last Thursday as he emphasized the importance of extending tax cuts. The fact is, his own party in Congress is blocking a Democratic proposal to immediately extend tax cuts for millions of middle class families and businesses. Republicans allowed these tax cuts to expire and precluded their extension in the May tax reconciliation bill so as to make room for expensive capital gains and dividends tax breaks within the limited reconciliation amounts. At the time, they promised the Republican Chairman on the Finance Committee that extenders would be included in the next tax vehicle. However, Republicans yanked the tax cuts again when Congress passed pension reform legislation in August so as to use them as a sweetener for controversial estate tax cuts. Republicans continue to block Democratic efforts to vote on the tax extenders. In the past two weeks alone, Senate Democrats sought unanimous consent three times for the immediate passage of the “extender package,” a range of tax benefits that includes the college tuition tax deduction, the state and local sales tax deduction, and the R&D tax credit. Each time Democrats proposed legislation to pass these tax cuts that help middle class families, educators, and businesses, the Republican majority in the Senate refused and repeatedly asked that their objection be heard. The objection of Washington Republicans to immediately extending these tax cuts has indeed been heard, and millions of Americans will pay the price.
DEMOCRATS PROPOSED IMMEDIATE PASSAGE OF TAX EXTENDERS THREE TIMES; REPUBLICANS OBJECTED EACH TIME
Senator Baucus, Ranking Democrat on the Senate Finance Committee, proposed immediate passage of the tax cuts. Mr. Baucus: “Mr. President, I ask unanimous consent that the Senate proceed to Calendar No. 326, H.R. 4096; that the Senate adopt my amendment that is at the desk, the substance of which is the agreed-upon tax extender package; that the bill be read a third time and passed…” (Congressional Record, 9/13/06, S9491)
Majority Leader Frist objected to extending the tax cuts. Mr. Frist: “Reserving the right to object…I object.” The Presiding Officer: “Objection has been heard.” (Congressional Record, 9/13/06, S9491)
Senator Baucus proposed extending the tax cuts a second time. Mr. Baucus: “Mr. President, I ask unanimous consent that the Senate proceed to Calendar No. 326, H.R. 4096; that the Senate adopt my amendments Nos. 5003 and 5004, which is the agreed-upon tax extenders package…” (Congressional Record, 9/14/06, S9590)
Republican Senator Collins objected to the tax extenders package on behalf of Majority Leader Frist. Ms. Collins: “Mr. President, on behalf of the leader, I object. The leader objected yesterday. This is the same issue. He has asked I make his objection known.” The Presiding Officer: “The objection is heard.” (Congressional Record, 9/14/06, S9590)
Senator Baucus proposed extending the tax cuts a third time. Mr. Baucus: “I am again asking my colleagues to support my unanimous consent request to pass the negotiated tax extenders…I repeat, Mr. President, before the Chair in his role as a Senator objects, because he has been instructed to do so by the majority party, I think it is extremely irresponsible for this body not to enact these extenders right away…” (Congressional Record, 9/20/06, S9754)
Republican Senator DeMint objected to extending the tax cuts. Mr. DeMint: “In my capacity as a Senator from South Carolina, I object.” (Congressional Record, 9/20/06, S9754)
DEMOCRATS URGED IMMEDIATE PASSAGE OF TAX EXTENDERS
Senator Reid urged for the opportunity to vote on passing tax extenders. “If we had an opportunity to vote on these it would be virtually unanimous, Democrats and Republicans, but we are not provided the ability to vote on this.” (Congressional Record, 9/20/06, S9754)
Senator Lincoln warned taxes will be raised if extenders are not passed. “[T]here is no reason these extenders should be held hostage to all of these other things that people want to crowd into one basket. The bottom line is, by failing to renew these incentives, as Senator Baucus has said, for responsible behavior such as savings and getting a college education, we are raising the taxes on many of our hard-working American families this year.” (Congressional Record, 9/14/06, S9589)
Senator Nelson (NE) supported immediate passage of tax extenders. “I rise to state I support what Senator Baucus has proposed. It affects a number of Nebraska teachers and Nebraska families.” (Congressional Record, 9/14/06, S9590)
REPUBLICANS HOLDING MIDDLE CLASS TAX RELIEF HOSTAGE TO WEALTHY SPECIAL INTERESTS
“This summer, Republican leaders in both chambers used the tax break extensions to help build support in the Senate for the three-part measure (H.R. 5970) that also included a permanent reduction in the estate tax and an increase in the minimum wage.” (CQ Today, 9/22/06)
Republican Senator Gregg says middle class tax cuts needed as hostage for Republican strategy to protect tax cuts for the wealthy. “[I]f you don’t kill the hostage, there’s no threat.” (Wall Street Journal, 8/5/06)
Republican leadership thwarting vote on tax extenders; Frist undermining effort to extend tax cuts. “Grassley wants GOP Senators who are up for re-election to encourage Frist to free the popular extenders from the estate tax bill. Grassley is ‘frustrated that Senate Republican leadership and staff are generating objections to thwart that vote…’ Grassley’s effort to extend the tax cuts “has been undermined by Frist’s quest for permanent estate tax changes.” (CQ Today, 9/22/06)
Majority Leader Frist more interested in his political options than in extending the tax cuts. “[W]hen Baucus tried to bring to a vote a bill focused only on the extension of the tax benefits, Senate Majority Leader Bill Frist (R-Tenn.) blocked him. Frist said he wanted to preserve the option of a second chance for the full Senate to vote on the estate tax cut, the minimum-wage increase and extension of the tax benefits as a package.” (Los Angeles Times, 9/17/06)
Majority Leader Frist promises middle class tax extenders will only be passed if estate tax reform for wealthy families is passed. “If the Senate kills the trifecta bill, we will not return to it this year. That means we would have no permanent death tax reform, no tax policy extenders and no minimum-wage increase…It’s now or never.” (National Journal, 8/1/06)
House Majority Leader Boehner refuses a vote on middle class tax relief if estate tax reform for wealthy families is not also passed. “[A]nybody that wants any part of the bill, they get to vote for all of it or none.” (Roll Call, 9/6/06)
BY REFUSING TO PASS TAX EXTENDERS AS DEMOCRATS HAVE PROPOSED, WASHINGTON REPUBLICANS ARE RAISING TAXES ON MILLIONS OF MIDDLE CLASS AMERICANS AND BUSINESSES
Finance Committee Chairman Grassley agrees that Republican refusal to pass tax extenders will cost millions of families. “A delay of legislative action beyond the anticipated recess date of September 29, 2006, will cause hardship, tax compliance problems and confusion for the millions of taxpayers who claim these widely applicable tax benefits.” (National Journal, 9/14/06)
Republican failure to pass extenders risks higher costs and confusion for taxpayers. “According to a Wednesday memo compiled by Grassley’s staff after consulting with IRS officials, the IRS contracts with several printers to produce the 1040 and 1040A income tax return forms. IRS must finalize the information it is to submit to these printers by Oct. 15, in order to ensure that forms will be printed in time to be distributed to taxpayers at the beginning of 2007. If Congress has not passed extenders legislation by this time, the forms will omit lines instructing taxpayers to compute state and local sales tax, college tuition, or out-of-pocket classroom expenses into their tax liability. If Congress passes extenders legislation later, the IRS will print supplemental materials, but this will lead to additional expense and taxpayer error, the memo claims.” (National Journal, 9/14/06)
Republicans raise taxes on 3.6 million Americans by refusing to extend the college tuition tax deduction. The average cost of a college education has soared by 44 percent during the Bush Administration (College Board, 10/05), yet the Republican-controlled Congress chose not to extend the popular college tuition tax deduction in this year’s tax reconciliation bill and they continue to refuse extending this tax cut as part of the larger extenders package.
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