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Saturday, December 04, 2010

Senate Rejects Obama’s Plan on Extending Tax Cuts -

Senate Rejects Obama’s Plan on Extending Tax Cuts -

WASHINGTON — The Senate on Saturday rejected President Obama’s proposal to extend the Bush-era tax breaks for all but the wealthiest taxpayers, a triumph for Republicans who have long called for continuing the income tax cuts for everyone.

The Senate’s verdict set the stage for a possible deal in the coming days to extend the reduced tax rates even on high incomes temporarily, perhaps for up to two years. But with Senate Democrats and the White House badly splintered, and some lawmakers increasingly angry at the idea of sustaining President George W. Bush’s economic policies, the prospects of a compromise remain uncertain.

If Congress does not act, the tax rates expire for everyone on Dec. 31, meaning an increase across the board. The rate in the lowest bracket would rise to 15 percent from 10 percent and in the highest bracket to 39.6 percent from 35 percent.

The administration and Congressional leaders have been discussing a plan that would temporarily extend the income tax rates, and also include a one-year extension of jobless aid for the long-term unemployed, which has started to run out.

White House officials said they were pressing to continue other tax breaks for middle- and lower-income Americans included in the 2009 stimulus plan, which Republicans said they were considering. Many other taxes, including the estate tax, the alternative minimum tax, and taxes on capital gains, interest and dividends are also part of the talks.

Mr. Obama’s preferred plan fell seven votes short of the 60 it needed to advance under Senate rules. The vote was 53 to 36, on a bill adopted by the House on Thursday, that would end the Bush-era cuts on income above $250,000 a year for couples and $200,000 a year for individuals — a step Mr. Obama had hoped to take at the start of this year, but abandoned for fear of worsening the most severe recession since the Great Depression.

Republicans voted unanimously against the House-passed bill, and they were joined by four Democrats — Senators Russ Feingold of Wisconsin, Joe Manchin III of West Virginia, Ben Nelson of Nebraska, and Jim Webb of Virginia — as well as by Senator Joseph I. Lieberman, independent of Connecticut.
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