Senate Republicans firm on tax cuts for rich

By Kim Dixon and Andy Sullivan

(Reuters) – Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.

Taxes have become a flashpoint going into a November 2 election in which Republicans are seeking to wrest control of Congress from the president’s fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.

The uncertainty over tax policy is hanging over the slow economic recovery and is keeping investors guessing about what will happen to taxes on capital gains and dividends.

Prospects faded for breaking the deadlock when Republicans gave a cool reception to a signal on Sunday by John Boehner, their party’s leader in the House of Representatives, that he might be willing to bend.

In a political gambit, Senate Republican Leader Mitch McConnell proposed a freeze on all tax brackets, insisting that cuts for wealthier Americans, as well as for the middle class, must be kept in place.

“I’m introducing legislation today that ensures that no one in this country will pay higher income taxes next year than they are right now,” McConnell said on the Senate floor.

With control of the Senate, Democrats should be able to dictate whether there is a vote on the tax question ahead of the election but it is far from clear if they have enough party unity on the issue. McConnell may be hoping for enough defectors to bring his measure to the floor.

If Congress fails to take any action on the tax cuts enacted for all Americans under George W. Bush, Obama’s Republican predecessor, then they will expire at the end of this year.

Positions are so deeply entrenched and the risks so high for both sides that lawmakers may opt to put the issue on hold until after the election.

“WRESTLING MATCH”

Obama raised the stakes last week by accusing Republicans of holding middle-class tax cuts hostage to salvage lower rates for the rich.

To read more, visit: http://www.reuters.com/article/idUSTRE68B1SH20100914

No comments yet - you can be the first!

Leave a Reply

Your email address will not be published.