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Sunday, May 14, 2006
Senate Shirks Fiscal Responsibility; Passes Tax Reconciliation Bill
Thursday evening the Senate passed the almost $70 billion tax reconciliation bill, by a vote of 54-44. Sens. Rockefeller (D-WV) and Specter (R-PA) did not vote. Democrats who crossed the aisle to vote with Republicans were Nelson (D-FL), Nelson (D-NE), and Pryor (D-AR). Republicans who crossed the aisle were Snowe (R-ME), Chafee (R-RI), and Voinovich (R-OH).
Voinovich spoke extensively on May 3 on the Senate floor about the fiscal state of the U.S. and about how this is not the time to be continuing to irresponsibly cut taxes. He said:
Some members believe that the solution is to grow the economy out of the problem, that by cutting taxes permanently, the economy will eventually raise enough revenue to offset any current losses to the U.S. Treasury. I respectfully disagree with that assertion.... In November 2005 former Federal Reserve chairman Alan Greenspan testified before the Joint Economic Committee and told Congress: 'We should not be cutting taxes by borrowing.'... Instead of making the tax cuts permanent, we should be leveling with the American people about the fiscally shaky ground we are on.
More on Voinovich's comments can be read in this Washington Post column.
The $70 billion tax measure will extend Bush's cuts to tax rates on dividends and capitol gains through 2010. The bill also provides protection from the alternative minimum tax for 15 million families for this year alone. While this AMT relief does promote fairness within the tax code, it also signifies that Congress has once again failed to come up with a permanent solution for the tax, and has instead passed an expensive and short-term "patch" rather than dealing with the problem once and for all.
Republicans argue that this bill will spur growth by extending investment tax breaks; in reality this bill will do little to help the average American taxpayer. The "revenue raiser" in this bill is also argued to be little more than an accounting gimmick that will offset some of these costs now, but will come back with a vengance to starve federal coffers once we get beyond the ten-year scope of federal revenue estimates. More on that subject can be read in this CBPP report.
Washington Post: Senate Passes $70 Billion in Tax Cuts
Tax Policy Center: The IRA Conversion Provision in the 2006 Tax Reconciliation Bill
Posted by Becky Lewis
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