On May 12, the House approved, 344-76, a bill (H.R. 4275) that would extend indefinitely the 10 percent bracket’s income limits that were included in the 2001 Economic Growth and Tax Relief Reconciliation Act (P.L. 107-16). Rep. Pete Sessions (R-TX) sponsored the measure.
Last year, Congress approved a tax package (P.L. 108-27) that included provisions to temporarily accelerate the implementation of the tax cuts in the 2001 law (see The Source, 5/23/03). Under the law, the 10 percent tax bracket was temporarily expanded to include the first $7,000 of income for an individual and the first $14,000 of income for married couples filing jointly. The expansion will sunset at the end of 2004. At that time, the 10 percent tax bracket will be restored to the 2001 level.
During consideration of the bill, the House defeated, 190-227, a substitute amendment offered by Rep. John Tanner (D-TN) that would have extended indefinitely the 10 percent bracket’s income limits on the condition that Congress enact federal budget legislation that results in a balanced federal budget by FY2014. The cost of the substitute would have been offset by applying an additional tax of 1.9 percent for individuals with an annual income above $500,000 and for married couples with an annual income above $1 million.
Rep. Marsha Blackburn (R-TN) said that the bill “is a critical piece of legislation for 24 million lower-income Americans. If we do not pass this, their taxes are going to increase by 50 percent. We do not believe government is why America is strong. We think it is because of the people. It is Americans that make this country great, Americans that are making economic choices for themselves and their families, not having a government program taking away their checkbook. That is the Republican philosophy. We have led on this issue, and we are continuing to work to lower personal income tax brackets.”
Arguing that the bill “leaves out a good portion of middle America,” Rep. Xavier Becerra (D-CA) stated, “The folks who are losing here, and there are millions who would lose, are folks who make between $50,000 and $100,000. In other words, the one-fifth of America that most of us consider middle class is the group of Americans that are going to suffer, millions of them. Within the next 5 or so years, some 33 million of those households that earn between $55,000 and $100,000 are the households that are not going to get to benefit from this particular tax cut proposal. As unfair as that sounds, that is the reality.”
