A pair of prominent Republicans -- one from the Senate, the other from the House – on Thursday called for a permanent extension of tax cuts at all income levels, just as a vigorous floor debate was under way about Democratic legislation to extend tax relief
for just the middle class.
"Sen. Jim DeMint and I are introducing legislation that will ensure that no American, small business owner or family farmer will see a tax increase on Jan. 1, 2011, 2012, 2013 and beyond," said Indiana Rep. Mike Pence.
DeMint and Pence introduced the bill before Thanksgiving, but started promoting it Thursday. They want an up-or-down vote on all the tax cuts at the same time, a permanent end to the estate tax and a fix for the alternative minimum tax. The duo told reporters that uncertainty about future tax rates is stifling economic recovery.
"The economy is waiting to roar back in this country," DeMint of South Carolina said, "and the fact that we have waited this long to even address the issue tells you that the people running this government don't understand how business works."
If Congress does not act by the end of the year, tax cuts implemented early in the decade for all Americans will expire. Democrats want to extend only the cuts for American families earning less than $250,000 per year, and are hoping to force Republicans to vote separately in support of tax cuts for wealthier Americans.
"This is so grossly unfair," Speaker Nancy Pelosi said on the House floor of Republican attempts to block passage of an extension unless it includes the higher-earners. "There will be no tax bill for any situation unless there is a tax cut for middle income people in our country."
Democrats have indicated openness to a compromise that would extend upper-income cuts only temporarily. No good, DeMint said Thursday, because businesses need to know what rates will be five years down the road in order to be in a position to hire new workers.
DeMint, known in the Senate for his hard line on spending and support for far-right tea party candidates, dismissed a question about how much his proposal will cost.
"I don't accept that this is a cost to leave the money with the American people. We're leaving tax rates the same," he said.
Without the additional revenue from higher tax rates, the national deficit will climb by $3.7 billion over ten years, according to the non-partisan Congressional Budget Office. The upper-income cuts account for $700 billion.
The DeMint-Pence bill is unlikely to receive the bipartisan support it would need to pass during the lame-duck session. No Democrats have endorsed a plan that would permanently extend upper-income tax cuts.
A Democratic bill to extend cuts for the middle class and let the rest expire passed the House by a margin of 46 votes, but Republican leaders have called the measure dead-on-arrival in the more conservative Senate.
Majority Leader Harry Reid, emerging from a Democratic caucus meeting Thursday just before the House vote, said he would wait for the House to act before deciding how to proceed, but was clear about what remains Senate Democrats' top priority.
"The first concern we have is for the tax cuts for the middle class," Reid said.