CHN: Action on Expiring Tax Cuts Delayed
Congress recessed until after the November elections without addressing the Bush era 2001 and 2003 tax cuts and the improvements in the refundable tax credits enacted in the American Recovery and Reinvestment Act (ARRA) in 2009, both set to expire at the end of 2010. There seems to be widespread agreement in both parties that Bush tax cuts affecting 98 percent of taxpayers with incomes at or below $200,000 ($250,000 for married couples) should be extended. There is disagreement regarding the tax cuts for the wealthiest two percent. Most Democrats believe the $700 billion 10-year cost associated with extending the tax cuts for those making over $250,000 is too high a price to pay for those who have been the overwhelming beneficiaries of the tax changes in 2001 and 2003. Polls show that a large majority of the American public agree with that assessment. Democrats generally favor making permanent the ARRA expansions in the Child Tax Credit and the Earned Income Tax Credit while Republicans would allow them to expire. For a detailed analysis of the tax changes enacted in 2001 and 2003 and in ARRA that are set to expire, click here to see the August 11, 2010 Human Needs Report.
The stakes will be high when Congress returns in November to decide which provisions will be allowed to expire, which will be extended and whether the extensions will be permanent or temporary. The outcome of the November election is likely to loom large. If Republicans make substantial gains, they are likely to be emboldened in pressing for their plan to extend all of the 2001 and 2003 tax cuts. Advocates are already sounding the alarm that allowing the upper-income cuts to continue should not be the price to pay in exchange for making permanent the low-income refundable tax provisions in ARRA.