Senate Unveils Tax Bill's Price Tag

Senate Unveils Tax Bill's Price Tag

By JANET HOOK And JOHN D. MCKINNON

WASHINGTON—The Senate unveiled final details of a broad tax bill—and its 10-year price tag of $858 billion—and began debate Thursday night on the package, a significant step after two years of gridlock over how to treat expiring tax cuts enacted under former President George W. Bush. Without action, income taxes on nearly every American are due to rise on Jan. 1.

The Senate has moved quickly after Mr. Obama and Republican leaders unveiled the package Monday, with a key test vote now scheduled for Monday. The bill is expected to pass with support from most Senate Republicans and a substantial number of Democrats, after lawmakers agreed to extend expiring subsidies for ethanol and other alternative-energy sources. Backers now include Senate Majority Leader Harry Reid (D., Nev.), who had been withholding support over the bill's tax cuts for upper-income taxpayers.

House Democrats continued to voice opposition to a tax deal between the White House and Republicans on Thursday and urged leaders not to bring the agreement up for a formal vote. Jerry Seib has the latest from Washington
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But in the House, Democrats were in open revolt. In a closed-door gripe session, they chanted "Just Say No," capping a remarkable day of political theater before passing a nonbinding resolution that said the tax agreement shouldn't be considered in the House unless changes were made.

That resolution isn't seen as a threat to the tax deal, which includes a two-year extension of current tax rates for all income brackets, not just for income up to $250,000, as Democrats want. But the rebellion represented essentially a "no confidence" vote in the White House on a crucial issue.

Anger focused on the tax treatment of wealthier Americans and the fact that House Democratic lawmakers were frozen out of negotiations that produced the agreement. "This is not an acceptable package. We want a better deal,'' said Rep. Peter DeFazio (D., Ore.). House Speaker Nancy Pelosi (D., Calif.) suggested that she didn't want to kill the tax package, just change it. "We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote," she said in a written statement.

The rebellion among House Democrats reflected more than opposition to the legislation. It also showed the frustrations of a party bruised by heavy midterm election losses, and signaled that Mr. Obama may spark significant turbulence within his party as he tries to work with a newly empowered GOP next year. "A number of us are very frustrated. It is finally time for us to stop being spear-carriers here," Mr. DeFazio said. "It's time to tell the White House they are wrong.'' But House Democrats may have little power to change the basic framework of the tax deal.

Republicans generally support the package, though several conservative GOP lawmakers say it will add too much to the nation's budget deficit. Michael Steel, spokesman for House Republican Leader John Boehner (R., Ohio), said: "President Obama has said that failing to stop all of the job-killing tax hikes scheduled for January 1 will have serious consequences for our economy. House Republicans agree."

Tax provisions in the package will cost $801 billion over 10 years, according to Congress's bipartisan Joint Committee on Taxation. A 13-month extension of enhanced benefits for the long-term unemployed adds $57 billion. Because the bill identifies no offsetting cuts in federal spending, the entire amount, which is close to earlier estimates, will add to the deficit.

In unveiling the bill, the Senate added details to its treatment of inheritances. The federal tax on estates expired at the end of 2009 and is set to be reinstated from 2011 at a top rate of 55%, charged on estates over $1 million. The legislation would renew the tax at a top rate of 35% on estates over $5 million. In the bill released Thursday, the $5 million would be indexed for inflation, so it's real value wouldn't shrink over time. House Democrats want the tax to be set at a higher rate. Some are collecting signatures on a letter urging the tax be set at 45% for estates above $3.5 million.

“ Why does the Congress continue to remind me of a bunch of parents at a Little League game? ”

—William Ledsham

In a sweetener for many Democrats, the package extends a program of cash grants for wind and solar projects, as well as tax credits for energy-efficient appliances, although at reduced, pre-stimulus levels. It includes favorable tax treatment for mass-transit benefits for employees. It also includes a one-year extension of a 45-cent-a-gallon tax credit for fuel made from ethanol, a provision sought by farm-state lawmakers.

Jim Manley, a spokesman for Mr. Reid, said the House Democrats' protest would have no impact on the bill's progress in the Senate. "This vote demonstrates they may be irrelevant to this process," said Mr. Manley. White House Press Secretary Robert Gibbs said he still believed the agreement would pass this year without substantial changes.