Dems Hammer GOP For Proposing Middle Class Tax Hikes

Senate Democrats are working to shatter the GOP’s central argument in the tax battle — that unlike Democrats, they oppose raising taxes on anyone.

“It turns out that’s simply false,” Sen. Chuck Schumer (D-NY) told reporters Tuesday. “That’s because buried deep inside Senator Hatch’s proposal are three back-breaking tax hikes on middle class families. They’re actually willing to increase taxes on the middle class.”At a Capitol press briefing alongside Senate Health, Education, Labor and Pensions Chairman Tom Harkin (D-IA) and Sen. Richard Blumenthal (D-CT), Schumer highlighted three expiring working class tax cuts that the new Republican tax plan by Senate Finance Ranking Member Orrin Hatch (R-UT) lets lapse. The Democrats’ plan extends all three.

The first is the Earned Income Tax Credit (EITC) for low- and middle-income workers with qualifying children; the second is the American Opportunity Tax Credit (AOTC) that partially refunds college tuition, and the third is the expanded Child Tax Credit (CTC) for families raising children. All three were passed in the 2009 stimulus package and extended in December 2010 with bipartisan support.

The liberal-leaning Citizens For Tax Justice calculates (PDF) that extending the EITC and CTC status quo “would save 13.1 million working families, with 25.7 million children, a total of $11.1 billion, an average of $843 per family” in 2013.

“This idea that [Republicans] don’t want to raise taxes on anyone — they’re OK to raise taxes on many middle class people as long as they get their tax breaks for the very wealthiest among us,” Schumer said. “That’s an amazing and astounding point.”

In an email to reporters, a Hatch spokesperson responded that Democrats “conveniently ignored the fact that their proposal represents an almost $3,400 tax hike on 28.8 million middle-class families, because they don’t patch the Alternative Minimum Tax.”

One key middle class tax cut expiring at the end of the year is the payroll tax holiday, financed by Social Security funds, which would cut taxes on 160 million Americans by an average of $1,000. Neither Democrats nor Republicans want to extend it. Schumer argued it was always intended to be temporary economic stimulus, while the other three were designed to be permanent improvements to the tax code to help the middle class.

GOP aides contend that Democrats are picking and choosing for political spin. The payroll tax cut, they say, was no less intended to be temporary than any of the other three taxes. The stimulus package was advertised as “timely, targeted, and temporary,” they note.

“It’s a myth that they’re opposed to raising all taxes,” said Harkin. “As the GOP plan makes clear, they’re presently willing to let middle class taxes rise.”

Both parties want to extend the Bush-era tax cuts on middle incomes when they expire on Dec. 31. But Democrats want to let incomes above $250,000 rise to Clinton-era levels, while Republicans are adamant about extending them. The wrangling continued Tuesday when Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) tried to outmaneuver each other on upcoming votes.

Reid demanded two simple majority votes — one on Democrats’ plan to extend only middle income tax breaks and another on the GOP plan to extend all existing rates. McConnell, armed with the filibuster and politically invested in preventing Democrats from passing their bill, sought to broaden the votes to include a comprehensive tax proposal by President Obama — an effort to corner vulnerable Democrats on dividend and estate taxes.

“We are offering them a vote on their plan, and our plan,” Reid’s spokesman Adam Jentleson told TPM. “Two votes, majority threshold. They are just inventing reasons to avoid seeing whose bill can pass the Senate with majority support.”

Retorted McConnell’s spokesman Don Stewart: “If Dems want to put death tax back in at the President’s level and increase dividends at the President’s higher rate, then there would only need to be two votes. But they went out of their way to change what the President called for.”