Congress Passes Compromise Tax Package
On December 16, the House passed the tax compromise 277-148 — we’ve got the vote on our website. Under this agreement:
- The 2009 improvements to the Child Tax Credit and the expansion of the Earned Income Tax Credit would be extended for two years. This extension includes the $3,000 eligibility threshold for the CTC and the expanded EITC for married couples and families with three or more children.
- The Bush tax cuts enacted in 2001 and 2003 would be extended for two years, including those cuts for the wealthy.
- A two percent reduction in the employee contribution to the payroll tax from 6.2 percent to 4.2 percent for one year; employers would still pay 6.2 percent.
- Unemployment benefits would be extended for the long-term unemployed for 13 months.
- Taxes on capital gains and dividends will continue at the reduced rate of 15 percent for two years.
- The estate tax would be cut for two years by exempting the first $5 million per person and taxing assets above that amount at a 35 percent rate (in 2009, the exemption was $3.5 million with a 45 percent rate).
RESULTS is pleased that the Senate bill extends the 2009 improvements to the EITC and CTC, in part due to the persistent advocacy efforts of RESULTS activists across the country. However, the extension of the tax cuts for the wealthy, which will do little for the economy and increase the deficit, are reckless and irresponsible. These cuts add billions to our deficit and put social service programs in greater jeopardy down the road as Congress starts crafting its next budget. For these reasons, RESULTS did not endorse this bill. It is true that in the short run, this will do a great deal for working families and the unemployed. However, the high-end tax cuts and the payroll tax holiday will likely have a long-tern negative effect on the budget and social service programs — we cannot in good conscience stand behind these policies. Congress should be focusing its efforts on doing what is right by enacting tax policy that helps those who truly need it.
I think your hard work to make sure that these tax credits for low-income working families got included in whatever messy tax legislation moved forward is why they are in there. While we might feel conflicted about the broader process, you have yet again made a big difference in the lives of kids and families living in poverty.