What is in this article?:
- Guest: Congress โ a long way to go
- Small business tax bill
- What to do about former expiring 2001 and 2003 tax cuts?
- President Obama and most Democrats argue for an extension for all but the highest income earners.
- Republicans and some Democrats argue now is no time to increase taxes on anyone.
The 111th Congress had a lot of ground to cover in a short time when it returned from the August recess this week.
Congress will depart for the election trail on Oct. 8. While that’s enough time for the House to rewrite the Constitution if it had the mind to, that’s barely enough time for the Senate to approve the minutes from the previous day’s session. That’s no criticism of either chamber, but simply an acknowledgement of how the Constitution’s framers meant the two bodies to work.
The 800-pound gorilla in the room is what to do about former President George W. Bush’s expiring 2001 and 2003 tax relief. President Barack Obama and some congressional Democrats have been arguing for an extension for all but the highest income earners. Meanwhile, Republicans and many conservative and moderate Democrats argue that in today’s economy, now is no time to increase taxes on anyone.
One consideration for Congress is how to resolve the expiry of the death tax relief before rates and exemptions jump to pre-repeal levels, with the Senate’s No. 2 Republican working with conservative Democrat Sen. Blanche Lincoln of Arkansas to advance greater relief through lower rates and much-higher exemptions.
Conventional wisdom is that, unless Congress and the president can agree to at least a two-year extension of tax relief for all Americans, this issue is likely to spill into a lame-duck session (which presumably would begin in November). Therefore, some Democrats are likely to argue on the campaign trail that Republicans blocked extension of middle class relief by holding out for relief for higher income earners. Republicans will counter that those high-end earners include small businesses and add that all Americans are threatened with the highest tax hike in history, leaving it to voters to decide who boasts the correct message.
Whether a lame-duck session can settle the matter is by no means a foregone conclusion. Congress’ eyes are often much bigger than its collective stomach when looking at what it can accomplish in these kinds of mini-sessions.
Nearly all of the annual appropriations bills still have to be completed, unless Congress simply opts for a continuing resolution to extend the current law. If the tax issue is ultimately not resolved at the end of this year, next year would mean some very heavy lifting by the new Congress and a lot of uncertainty everywhere else.