Senate Passes Bill to End Tax Cuts for High Income Earners

BY Cassie M. Chew  July 25, 2012 at 5:54 PM EST


Senate Majority Leader Harry Reid. Photo by Tom Williams/CQ Roll Call

The Senate voted 51 to 48 Wednesday to approve highly contested legislation that would raise taxes on high income earners while lowering taxes on middle income earners.

Vice President Joe Biden made the trip to Capitol Hill to preside over the vote on the Democratic measure, dubbed the Middle Class Tax Cut Act. It aims to raise taxes on high income earners while preserving tax cuts for 114 million middle income taxpayers. Democrats estimate that would save every person $1,000 to $1,600 in 2013 should it become law.

“Republicans should not hold the middle class tax cut hostage,” Senate Majority Leader Harry Reid, D-Nevada, said in remarks prior to the vote. “All you folks who love to give tax cuts to the millionaires, our bill does that–the first $250,000 they make they are treated just like a middle class family.”

But Republicans argue that tax increases on anyone are bad policy.

“This proposal guarantees that taxes are going to go up on millions of our small businesses,” countered Senate Minority Leader Mitch McConnell, R-Kentucky. “It guarantees that taxes go up on capitol gains on dividends which provides income for a huge number of our senior citizens.”

Earlier Wednesday, the Senate rejected a competing GOP plan to keep all of the George W. Bush-era tax cuts.

President Barack Obama has been campaigning on his tax cut plan, and has said he would sign the bill immediately. But in an election year, and with Republicans controlling the House, it is virtually impossible it would pass both chambers.

“It has no chance of becoming law,” McConnell said during floor debate.

The president issued this statement after the vote:

With the Senate’s vote, the House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98% of Americans and nearly every small business owner. The last thing a typical middle class family can afford is a $2,200 tax hike at the beginning of next year. It’s time for House Republicans to drop their demand for another $1 trillion giveaway to the wealthiest Americans and give our families and small businesses the financial security and certainty that they need. Our economy isn’t built from the top-down, it’s built from a strong and growing middle class, and that’s who we should be fighting for.

Gwen Ifill will examine the vote and what’s next on the NewsHour Wednesday night.

Watch the video of her discussion with Todd Zwillich of WNYC’s “The Takeaway” and NPR’s Julie Rovner.

They also will talk about a newly released government report that amends figures on the cost of the Affordable Care Act and the number of people who will ultimately become insured under the law’s Medicaid expansion provision in the wake of last month’s Supreme Court decision.

While the court upheld the individual mandate and the effort to expand Medicaid, it found that states can opt out of adding to their Medicaid expansion, which opens coverage to anyone between 19 and 64 with incomes up to 138 percent of the federal poverty level.

“It’s going to cut federal costs by $84 billion mostly because it’s going to cover less people,” Rovner told the NewsHour Wednesday. “They wouldn’t specify what they think about which states will expand their Medicaid programs, but they said that after 10 years, about 6 million less people will be added to Medicaid rolls than previously expected.”

Medicaid expansion was considered mandatory and an estimated 17 million people were expected to enroll in the federally subsidized health care program, Rovner said.

NewsHour coordinating producer Linda J. Scott and Reporter-Producer Tiffany Mullon contributed to this story.