WASHINGTON — The U.S. House of Representatives voted Wednesday to extend tax cuts through 2013 for all income levels, despite a veto threat from President Barack Obama.
The 256-171 vote, mostly along party lines, continues a stalemate on tax policy that lawmakers say will last beyond the Nov. 6 election. Nineteen Democrats voted for the Republican bill, and one Republican was opposed. The measure won’t advance in the Democraticled Senate.
U.S. Rep. Mike Ross, DArk., was among the Democrats who supported the bill. His fellow Arkansans in the House — Republican Reps. Rick Crawford, Tim Griffin and Steve Womack — also voted for it.
Some other Democrats backing the Republican plan included Larry Kissell of North Carolina, Bill Owens of New York, Gerry Connolly of Virginia and Jim Costa of California. The lone Republican to vote against his party’s plan was Timothy Johnson of Illinois.
“The choice Republicans have made is to pass this bill, work toward comprehensive tax reform and create jobs,” said Rep. Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee. “Now is not the time to dig the hole we’re in any deeper.”
Obama and congressional Democrats want to let the tax cuts expire for top earners, and each side is accusing the other of holding the country hostage to get its way.
If Congress doesn’t act by the end of the year, tax rates for income, capital gains, dividends and estates will increase for all taxpayers. The top income-tax rate would increase to 39.6 percent from 35 percent, and the top rate on capital gains would rise to 23.8 percent from 15 percent.
The tax increase is part of the $607 billion so-called fiscal cliff of automatic spending cuts and revenue changes in 2013 that the Congressional Budget Office says would probably cause a recession if left unchanged.
On July 25, the Senate voted 51-48 to pass a plan supported by Obama that would let the tax cuts for top earners expire. The House rejected that approach earlier Wednesday on a 170-257 vote.
Republicans said the Democratic proposal would hurt the economy with a disproportionate effect on business owners who pay taxes on their profits through their individual returns.
“The choice is clear: You either want growth or you want more taxes,” said Rep. Eric Cantor, R-Va., the House majority leader. “You either want to endow the folks who earn the money with the right to keep that money and grow this economy, or you want to tax those people more and let Washington decide how it’s going to allocate that money.”
Democrats said higher-income households can afford to pay more to help reduce the federal budget deficit. Over a decade, the Democrats’ plan would generate at least $900 billion more money for the government.
The House will vote today on a separate Republican proposal to establish a fasttrack process for considering a tax-code overhaul in 2013. The measure sets out parameters for an overhaul, which would cut the top corporate and individual tax rates to 25 percent from 35 percent, combine the six-bracket system into two and curtail or eliminate tax breaks.
The Republican bill is HR8. The Democratic alternative is HR15. The Republican tax-overhaul-process bill is HR6169. The Senate-passed bill is S3412.
Earlier Wednesday, Speaker John Boehner, R-Ohio, and other House Republican leaders urged Senate Democrats to pass the tax-cut extension for all income levels.
“It is the interest of our economy to quickly remove the threat of the entire tax hike,” Boehner said in the letter to Senate Majority Leader Harry Reid, a Nevada Democrat. The letter also was signed by Cantor, Majority Whip Kevin McCarthy of California and Republican Conference Chairman Jeb Hensarling of Texas.
“In the event the Senate takes action, we stand ready to bring the House back into session for the purpose of enacting solutions,” the letter said.
In a response to Boehner, Reid said the House Republican demands were “extreme and wrong” and urged House leaders to adopt the Senate’s tax measure.
“For nearly two years, the Republican-led House has ignored the will of the American people by accomplishing virtually nothing of bipartisan substance,” Reid wrote. “If the House is prepared to ask millionaires and billionaires to contribute their fair share, the Senate is prepared to remain in session as long as necessary to approve an agreement on a balanced deficit-reduction package.”
Meanwhile, Sen. Tom Coburn, an Oklahoma Republican, said he will block a panel vote on an agreement to revive lapsed tax breaks, including a credit for corporate research and a benefit for financial-services companies’ overseas operations.
The Senate Finance Committee early Wednesday had scheduled a vote for today on the $152 billion plan, which would continue most of the breaks through 2013. Coburn, saying he wanted more time to review the measure, said he would invoke a rule requiring 48 hours’ notice of a committee vote.
The bipartisan proposal doesn’t include several lapsed or expiring breaks, including the production tax credit for wind energy, accelerated depreciation for motorsports tracks, tax breaks for investment in the District of Columbia and a tax credit for ethanol.
Senators may add some of those provisions into the bill today if the committee meeting takes place as scheduled. Committee Chairman Max Baucus said he probably will modify the proposal before the vote, while declining to say how.
He said after Coburn’s comments that he is trying to reach a consensus.
“It feels good,” Baucus, a Montana Democrat, told reporters Wednesday about the measure. “We reached agreement. That’s the main thing.”
In another development, a Pentagon off icial said Wednesday that war fighters heading to Afghanistan would receive less training while the Navy would be forced to buy fewer ships if lawmakers fail in the next five months to come up with an alternative deficit-reduction plan.
Imploring Congress to act, Deputy Defense Secretary Ashton Carter and the White House’s acting budget chief, Jeff Zients, outlined the devastating effect on defense and domestic programs if $110 billion in across-the-board reductions begin Jan. 2.
That approach “is a blunt, indiscriminate instrument designed to force congressional action on achieving a balanced deficit-reduction plan,” Zients told the House Armed Services Committee. “It is not the responsible way for our nation to achieve deficit reduction.”
Zients pointed out that Congress wrote the law calling for the automatic cuts and has five months to act. “What’s holding it up is the Republican refusal to make the top 2 percent pay their fair share” in taxes, he said.
Carter said military personnel would be exempt from the automatic cuts, but every other military account would be affected, from weapons to the number of hours commissaries operate to potential furloughs.
Information for this article was contributed by Richard Rubin, James Rowley, Roxana Tiron and Kathleen Hunter of Bloomberg News; and by Donna Cassata and Lolita C. Baldor of The Associated Press.
Front Section, Pages 1 on 08/02/2012