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Senate Votes to Extend Tax Cuts For Five Years

The U.S. Senate voted to extend $70 billion dollars in tax cuts, first enacted in 2003, for five years. While Republicans credit these tax cuts with a surging economy, Democrats believe a majority of Americans are being left out.

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  • RAY SUAREZ:

    With public discontent growing over the war in Iraq, with rising gasoline prices, and with congressional elections just six months away, President Bush and his fellow Republicans are turning to a historically popular component of their domestic agenda: tax cuts.

    REP. DAVID DREIER (R), California: I'm a proud Republican. I'm a proud Republican. And by virtue of being a Republican, I was born to cut taxes.

  • RAY SUAREZ:

    As a $70 billion tax cut package made its way through Congress this week, Republicans, including Treasury Secretary John Snow, held several public rallies touting the benefits of slashing taxes.

  • JOHN SNOW, U.S. Treasury Secretary:

    Low tax rates lead to more investment; they lead to more GDP growth; they lead to more job creation; and they lead to rising real wages.

  • RAY SUAREZ:

    The bill that passed the House yesterday and the Senate today has two main elements. It extends the 15 percent tax rate on capital gains and dividends through 2010 — that was first reduced in 2003 — and it extends for a year protection for upper-middle-class families from the Alternative Minimum Tax.

    While Republicans credit these tax cuts, first enacted in 2003, with a surging economy, in today's debate, Democrats like New York's Chuck Schumer said a majority of Americans are being left out.

    SEN. CHUCK SCHUMER (D), New York: Too many provisions that affect the middle class are hurt, and the one that I'm going to focus on is one of the best provisions we have passed under this new president, and that is making tuition tax deductible, for people's income who goes about up to $150,000 a year. That's gone. That's not extended for one new year or two new years; it's gone.

    And when people on the other side of the aisle, whether they're up for re-election this year or not, vote against our proposals and vote for this tax bill, they will be taking away from the middle class one of the best benefits that we have given the middle class in recent years.

  • RAY SUAREZ:

    Mississippi Republican Trent Lott countered.

    SEN. TRENT LOTT (R), Mississippi: I don't understand this class warfare stuff that is always going on. You know, if you cut taxes for people that actually pay taxes, that's bad. And if you cut taxes, you automatically will get less. When are we ever going to grow up and get over that?

  • RAY SUAREZ:

    Oregon Democrat Ron Wyden followed Lott.

    SEN. RON WYDEN (D-OR), Senate Energy Committee: I just want to say to the distinguished senator from Mississippi that I'm certainly not interested in class warfare, but what I am interested is giving all Americans a fair chance to accumulate wealth.

  • RAY SUAREZ:

    Democrats repeatedly pointed to a study from the nonpartisan Tax Policy Center showing that millionaires would save an average of $42,000 in taxes under the plan while people earning less than $50,000 a year would save less than $50 in taxes.

    Democrat Christopher Dodd's home state, Connecticut, has the largest number of millionaires per capita in the country.

    SEN. CHRIS DODD (D), Connecticut: As I stand here today, Mr. President, I would tell you that the majority of those people who do well in my state think this bill is a bad idea. They're not calling, and writing, and e-mailing demanding that this bill be signed into law. They understand fiscal responsibility.

    They think it's a mistake for us to be going deeper, and deeper, and deeper into debt. With incomes of over a million dollars, they are 146,000 people in this country that make more than $5 million a year, 146,000 of them. They get an $82,000 tax break under this bill.

  • RAY SUAREZ:

    But New Hampshire Republican Judd Gregg argued that the wealthy carry the bulk of the overall tax burden.

    SEN. JUDD GREGG (R), New Hampshire: The high-income individuals in this country actually paying more in taxes today than they did prior to the tax cuts, significantly more in taxes, and also bearing a larger percentage of the burden of taxes in this country today than they did before the tax cuts.

    So it's just a fairer way to approach tax policy. As a result of that fairer way, you generate more income, more economic growth, and that leads to more jobs, which is the purpose of our efforts here.

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