liberal tax cut concerns

Well this is rapidly changing even as I write, but two notable developments, in the wake of Bernie Sander’s filibuster last Friday:

First up: Liberal concerns delay House vote on tax-cut deal. House Democrats are quite unhappy about the bill, athough this article focuses for some reason on the estate tax provision, which I don’t see as being all that problematic in the compromise:

Dozens of Democrats were demanding an opportunity to cast a vote to change an estate tax provision they view as too generous for the wealthy without also approving the rest of the package as approved by the Senate. That package also contains a two-year extension of George W. Bush administration tax policies that benefit families at all income levels, including the very wealthiest Americans. Democrats have complained for years about those provisions, and want an opportunity to vote against them.

The delay was unlikely to derail the package, which is intended to prevent tax rates from rising in January for virtually every household. But lawmakers and senior Democrats aides said the revolt appeared likely to postpone the a final vote on the $858 billion measure until later in the day.

The compromise will exempt estates up to $5 million and thereafter impose a 35 percent rate on larger inheritances. The new tax would affect the smallest number of estates in any year since 1934, except for this year when the tax lapsed. And certainly economists consider tax cuts to have only a modest impact on the economy since such money tends to be saved rather than spent. Even so, this continued focus on the estate tax strikes me as a little odd, when the bill has so much other grist in the mill, as it were.

Of greater concern, I think, is the payroll “tax holiday,” but there has been little to no coverage of the potential effect this will have. Simply put, since the payroll tax directly funds Social Security, reducing this withholding directly affects the monies put into Social Security’s funding. This is the most direct assault I’ve seen on dismantling Social Security — no wonder the Republicans are so enthusiastic about it. Digby has been covering this angle, and draws our attention to a proposed amendment in A Small Important Change

I strongly urge you to support Rep. Brad Sherman’s amendment to the President’s tax agreement with Republican leaders, H.R. 4853. This amendment would replace the proposed payroll tax “holiday” with refund checks to every employee that pays Social Security. The check would be equivalent to the 2% payroll tax cut that would take place under the President’s plan without undermining the integrity and fiscal security of Social Security. It is important that Congress preserve a program that provides security to millions of retired workers, veterans, widows, and children.

Emphasis mine. I don’t know what the timetable is or the possibilities, although the delay from the aforementioned brouhaha over the estate tax might give the amendment a chance to be considered. It sounds like a very sensible fix to a potentially serious problem down the road (do any of you seriously think, once we’ve done one “payroll tax holiday,” we’ll stop there?).

In any case all this appears to be moot: Congress Sends Tax Cut Bill to Obama as Logjam Ends.

The 277-to-148 vote in the House came after a tense night in which Liberal Democrats skirmished with party leaders over a proposed vote on an amendment to tax more wealthy estates and at a higher rate than was included in a provision agreed to by the Obama administration.

The liberals, many of them angry about the prospect of continuing the tax policies of President George W. Bush, complained that party leaders had structured the debate so that they could not vote in favor of the amendment to the estate tax provision without also voting in favor of the entire package.

Representative Charles B. Rangel, Democrat of New York, said he supported the change in the estate tax, which he said would save $23 billion. But, he complained, “in order to do that I would have to accept the remainder of the Senate bill.”

By Thursday evening, however, an accommodation had been reached and floor action resumed. In a key test, the House voted 214 to 201 to approve the new terms of debate.

So now I guess we shall see what effect this bill will have over the next two years and beyond. I’m going to be watching that poison pill payroll tax reduction, that’s for sure.

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