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Boehner plan ends tax cuts for rich, poor

  • Article by: STEPHEN OHLEMACHER
  • Associated Press
  • December 20, 2012 - 1:59 AM

WASHINGTON - Taxpayers making more than $1 million would get hit with tax increases averaging $100,000 next year under House Speaker John Boehner's alternative tax bill, according to an independent analysis.

Some low-income people would get smaller tax increases because the plan would not renew several tax cuts first enacted as part of President Barack Obama's 2009 economic stimulus package, according to the analysis by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute.

Boehner's bill is scheduled for a vote by the House on Thursday. Senate Democratic leaders say it has no chance to pass the Senate. The Ohio Republican offered it as a backup plan in case stalled talks with Obama fail, saying it extends tax cuts for the overwhelming majority of taxpayers.

If Congress and the White House don't reach an agreement, taxes would go up for nearly every American family as part of the year-end "fiscal cliff."

"The House will pass legislation to make permanent tax relief for nearly every American, 99.8 percent of the American people," Boehner said Wednesday. "Then the president will have a decision to make. He can call on the Senate Democrats to pass that bill or he can be responsible for the largest tax increase in American history."

Boehner's plan would permanently extend tax cuts first enacted under President George W. Bush on incomes below $1 million. Income above $1 million would be taxed at 39.6 percent, instead of 35 percent. Boehner's plan would also permanently adjust the alternative minimum tax, sparing millions of middle-income people from paying it.

Boehner's plan would permanently extend the $1,000 child tax credit, but it would end an enhancement by Obama that makes the credit available to more low-income people who don't make enough money to owe federal income taxes.

Boehner's bill also lets expire an expanded tax credit for college tuition and related expenses, and an enhanced Earned Income Tax Credit for low-income families with three or more children.

As a result, about 25 percent of taxpayers making between $10,000 and $20,000 would get tax increases averaging $1,070 next year, according to the Tax Policy Center analysis. About 22 percent of taxpayers making between $20,000 and $30,000 would get tax increases averaging $999.

"Those people are going to get hit," said Roberton Williams, a senior fellow at the Tax Policy Center. "I suspect that's mostly the child credit."

About 73 percent of taxpayers making more than $1 million would get tax increases averaging $99,296, according to the analysis.

Obama's latest offer in fiscal cliff negotiations would extend his 2009 tax cuts for low-income families, according to the White House. But plans by both Obama and Boehner would let a temporary Social Security payroll tax cut expire, resulting in a $1,000 tax increase next year for a typical family making $50,000 in wages.

The White House criticized Boehner's plan, issuing a paper saying it would raise taxes on 25 million working families with children. House Republican's issued a rebuttal, saying, "These provisions are stimulus spending that the Democrats promised would be temporary and that failed to create jobs, not tax cuts."

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Associated Press writer Jim Kuhnhenn contributed to this report.

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