House votes to extend tax cuts

Lawmakers clash over economy

December 09, 2005|By JILL ZUCKMAN | JILL ZUCKMAN,CHICAGO TRIBUNE

WASHINGTON -- Congressional lawmakers clashed bitterly yesterday over the best way to stimulate the economy, with the Republican-led House passing tax cuts on capital gains and dividends and some Democrats arguing that the vote favored the rich and ignored more critical needs.

The House voted 234-197 to approve a $56 billion measure to extend capital gains and dividend tax cuts for two more years, until 2010. The extension would leave the tax rate on investment gains at 15 percent. The bill would also allow people to deduct state and local sales tax from their federal income taxes, and it would expand the brownfields program to allow deductions for cleaning up sites contaminated by petroleum products.

Republicans said the tax bill is an important way to maintain investor confidence, encourage job creation and continue economic growth. They also saw the legislation as a prime opportunity to boast about the economy, something GOP leaders have complained that the White House has not been doing very well.

"This tax relief bill is the fuel necessary to keep the engine of economic growth humming," said House Speaker Dennis Hastert, an Illinois Republican. "Republican tax policies have led to strong growth. For 10 straight months, economic growth has exceeded 3 percent, and the deficit is decreasing. Unfortunately, Democrats only want to raise taxes - a job-killing tactic that will hurt workers and stifle economic growth."

The White House praised the House for continuing President Bush's tax policies.

"These extensions are necessary to provide certainty for investors and businesses and are essential to sustaining long-term economic growth," the Office of Management and Budget said in a statement.

Democrats complained that the GOP majority cut vital social programs for poor women and children to spend billions on tax cuts for the wealthiest Americans. And, they said, the legislation would add about $20 billion to the deficit.

"With all the problems facing middle-class families - soaring energy costs, coupled with skyrocketing health care costs and education expenses and flat incomes - five years in a row - and what's the solution offered by this Republican Congress?" asked Rep. Rahm Emanuel, an Illinois Democrat. "Cut capital gains and dividend taxes for millionaires. It's time for a change and new priorities rather than the same old tired, failed policies that have gotten Americans where we are today."

House Minority Leader Nancy Pelosi, a California Democrat, said Congress should be helping people pay to heat their homes this winter instead of passing tax bills that benefit the very rich.

But with a week or two remaining in this year's congressional session, new energy legislation is unlikely to be enacted as cold weather hits much of the country.

The tax bill itself seems destined to remain unfinished until the beginning of 2006 because the House and Senate have taken such drastically different approaches.

Jill Zuckman writes for the Chicago Tribune.

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