Senate Passes Measure Preventing Tax Hike for Millions of Americans

WASHINGTON (AP) - The Senate Wednesday overwhelmingly passed a
sweeping tax package that would save millions of Americans
thousands of dollars in higher taxes while also reducing their
Social Security taxes and extending jobless benefits.

The $858 billion package now goes to the House, where many
Democrats are unhappy with a provision that allows estates as large
as $10 million to pass to heirs tax-free. Democratic leaders,
however, say they expect the bill to ultimately pass and become

A wide array of tax cuts enacted under President George W. Bush
is scheduled to expire on Jan. 1 - just two weeks away - affecting
taxpayers at every income level. The bill passed by the Senate,
81-19, would extend them for two years.

Obama urge quick action in the House.

"I know there are different aspects of this plan to which
members of Congress on both sides of the aisle object. That's the
nature of compromise," the president said. "But we worked to
negotiate an agreement that's a win for middle-class families and a
win for our economy, and we can't afford to let it fall victim to
either delay or defeat."

House Democratic leaders said they expect to vote on the bill

Obama negotiated the package with Senate Republicans, and then
administration officials worked for days to persuade congressional
Democrats to support it, signaling a possible blueprint for future
legislation. Because of November's election victories, Republicans
will take control of the House in January and gain seats in the

The bill would extend expiring tax cuts at every income level.
It also would renew a program of jobless benefits for the long-term
unemployed that is due to lapse, and enact a one-year cut in Social
Security taxes. The bill's cost, $858 billion, would be added to
the deficit.

Some Senate Republicans balked at the price tag, noting that
Obama's deficit commission recently outlined the massive fiscal
problems facing the nation.

"The American people are going to be looking, and they're going
to say, does the Senate get it? Do they understand the severity and
the urgency of the problems that face our fiscal future?" Sen. Tom
Coburn, R-Okla., said Wednesday.

At the insistence of Republicans, the plan includes a more
generous estate tax provision: The first $10 million of a couple's
estate could pass to heirs without taxation. The balance would be
subject to a 35 percent tax rate.

The lower estate tax infuriated some Democrats who were already
unhappy with Obama for agreeing to extend tax cuts for individuals
making more than $200,000 and couples making more than $250,000.

"This administration fights for nothing," said Rep. David Wu,

The estate tax was repealed for 2010. But under current law, it
is scheduled to return next year with a top rate of 55 percent on
the portion of estates above $1 million - $2 million for couples.

House Democratic leaders want to bring back the 2009 estate tax
levels. That year, individuals could pass $3.5 million to their
heirs, tax-free. Couples could pass $7 million, with a little tax
planning, and the balance was taxed at a top rate of 45 percent.

House Democrats said they are considering a vote to impose the
higher estate tax, perhaps as an amendment to the package. But even
critics of the lower estate tax say they expect the package to be
enacted without changes.

"Let's find out if Republicans really want to jeopardize income
tax, payroll tax and estate tax relief for every American in order
to provide a budget-busting bonanza to the country's richest
estates," Rep. Chris Van Hollen, D-Md., wrote in an op-ed in
Wednesday's Washington Post. "House Democrats think this trade-off
should be debated and voted on in the light of day."

Rep. Bill Pascrell Jr., D-N.J., said, "We can jump up and down
all we want about the higher-end estate taxes, and I don't think
anything's going to change because the Senate isn't going to change

Thirty-one members of the conservative Blue Dog Democrats sent a
letter to House Speaker Nancy Pelosi urging quick passage of the

"It is time for us to put aside the partisan talking points and
accomplish what the American people sent us here to do," said the

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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