Congress Debates Ending Bush Tax Cuts

Whether to extend the Bush tax cuts -- which they're widely referred to as -- has created division between Democrats and Republicans.

Most Democrats and President Obama want only portions of the tax cuts to expire --specifically the cuts for families making more than $250,000 a year -- while extending the tax cuts for the middle class. Most Republicans, however, want to extend all of the tax cuts. 

The outcome of this debate could shape tax policy for generations to come.

Taxes, just a part of society

	State taxes pay for Medicare, Medicaid and other services for the poor.

State and local taxes pay for public schools, park maintenance and programs for the poor and other local services. 

At the federal level, taxpayer money goes toward paying the salaries of government officials (members of Congress and the president) as well as for national defense and other national programs.

It is the responsibility of the Internal Revenue Service (IRS), a government agency, to enforce that all eligible individuals pay their taxes.

A break more beneficial to some

	With the expiration deadline for these cuts nearing, the idea of raising taxes for some Americans has divided Congress.

When a tax cut is implemented, the government reduces how much an individual pays into the pot. Essentially, the government decreases its intake of revenue from citizens, thus allowing citizens to hold on to more of their money.

The Bush tax cuts lowered tax rates about 3 percent. So someone in the highest tax "bracket" went from paying more than 39 percent of their salary to 35 percent.

The nonpartisan Congressional Budget Office (CBO) reported in 2007 that the top 1 percent of income earners, under the Bush tax cuts, received the most tax relief (3 percent of $2 million is much more than 3 percent of $35,000 -- $60,000 compared to $1050).

Many Democrats believe the Bush tax cuts have been a factor in creating the current federal deficit of more than $1 trillion. (The deficit is the amount of money the government must borrow when it spends more than it collects in taxes.)

Republicans, on the other hand, attribute the deficit to the Democrat's $862 billion stimulus package, which aimed to save jobs and put extra money into the struggling economy.

Democrats want extension only for middle-class

	Democratic Pres. Barack Obama doesn't see eye-to-eye with Republican Minority Leader John Boehner on which portions of the Bush tax cuts should expire, and which should be extended.

Speaker of the House Nance Pelosi, D-Calif.,agrees with President Obama that tax cuts for the middle and lower class should be extended, but  an expansion of tax cuts for families making more than $250, 000 is out of the question.

"My stance is that the Bush-era tax cuts contributed to the deficit, did not create any jobs, that they should be repealed," said Pelosi. "What we should, though, renew are the middle-income tax cuts."

Republicans like House Minority Leader John Boehner, R-Ohio, letting any of the tax cuts expire is the same as a tax hike.

Boehner believes that the tax cuts should be extended for everyone because many small business owners, who presumably make more than $250,000, would be hit with a big tax bill.

"I'm not raising taxes on the American people in a soft economy," said Boehner.

The debate on whether or not to extend the Bush tax cuts will resume when Congress reconvenes in September and is sure to be a part of the upcoming elections in November.