Sunday, May 19, 2013
It will likely be one of the first orders of business for Maine's next U.S. senator: extend the Bush tax cuts or let them expire?
With Congress deadlocked so far on which cuts to keep, the winner of the election Nov. 6 could cast a key vote.
The two major-party candidates are sticking to the party lines drawn in Washington.
Republican Charlie Summers said he wants all of the tax cuts extended. Democrat Cynthia Dill said she wants to extend tax cuts on household earnings of less than $250,000, while letting taxes rise for higher earners.
Independent Angus King, meanwhile, said he would vote to extend all of the tax cuts for now, but he supports setting a trigger to rescind the tax cut on income of more than $250,000 as the economy improves.
The fate of the cuts is one of the major issues dividing Congress in the run-up to the November elections.
Allowing them to expire would raise taxes on middle-class and high-income Americans, while extending them would add further to the federal budget deficit.
Bush proposed the reduction in income tax rates and other taxes in 2001 and 2003 to stimulate the economy. The cuts were set to expire in 2010 until President Barack Obama and Congress agreed to extend them two years.
Unless Congress extends them again, they will expire Jan. 1.
It is now almost certain that there won't be any resolution until after the election.
The Democratic-controlled Senate voted 51-48 last week to extend the cuts for the first $250,000 of household income but allow the rates to rise for earnings above that amount. Maine's two Republican senators, Olympia Snowe and Susan Collins, voted with Republicans against the proposal.
The Republican-controlled House, meanwhile, voted 256-171 Wednesday in favor of a counter proposal that would extend the Bush tax cuts for all income levels. Maine's two Democratic representatives, Chellie Pingree and Mike Michaud, voted with Democrats against the proposal.
About 98 percent of Maine households earn less than $250,000, according to the Institute on Taxation and Economic Policy.
Democrats argue that higher earners can afford to pay the increase without any harm to the economy.
"The money that we spent on these tax cuts for the superwealthy are the major drivers of deficit (and) it's obvious these tax cuts for the superwealthy have not created the jobs or the economic growth," said Dill, a state senator from Cape Elizabeth. Middle-class families are more likely to use the tax savings in the local economy, she said, while "the super-rich will just invest more of their money and continue to make more money. It doesn't circulate though the economy."
Republicans, meanwhile, say a tax increase on anyone is a bad idea in a slow economy and that targeting high earners would leave them less money to expand small businesses and hire workers.
"In this economy, I don't think we should be raising taxes," said Summers, who is Maine's secretary of state.
Summers, who has signed a pledge to oppose any tax increases if elected, said some of the Maine households earning more than $250,000 are small-business owners and employers.
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