If the House has its way, married couples will no longer be penalized because their combined earnings push them into a higher tax bracket.
The House on Wednesday voted 323-95 to make President Bush’s tax cut permanent, reducing the so-called "marriage penalty," the New York Times reported. The plan now goes to the Senate, which is apparently more divided about how to pay for future tax cuts.
The marriage-penalty provision was a popular tax cut, but it was scheduled to expire at the end of this year. The Republican-sponsored bill would continue the tax break at a cost of $105 billion over 10 years. The bill would also make permanent an expansion of the standard deduction and the earned-income tax credit for couples. The bill would save 35 million families about $700 a year in taxes, according to Republicans.
"Marriage should be celebrated, not taxed," said House Speaker J. Dennis Hastert. "When couples get married, the tax man is left off the guest list for a reason."
Democrats, however, while supporting relief for middle-income families, want to control the ballooning federal budget deficit by increasing taxes on the rich to offset the cost of the tax breaks, the Washington Post reported.
The Democratic marriage-penalty alternative would have included additional tax breaks to protect two-income couples from the alternative minimum tax. The cut would have been funded by a new surcharge of 3.6 percent on those earning more than $1 million a year. That plan would have raised $207 billion over the next 10 years.
"At a time when we're facing the largest deficit in this nation's history, and at a time when we're fighting wars in Iraq and Afghanistan with no sense of when we will bring our troops home and at what cost, now is the time to be responsible," said Rep. Xavier Becerra (D-Calif.). "I guess you can keep spending — the credit card looks good. But at some time, we will pay."
The House debate Wednesday was part of a larger question of whether tax cuts passed in 2001 and 2003 should be extended across the board, and at what cost.
The Post reported that it’s unclear how tax cuts will play with voters in November. According to a poll by the University of Pennsylvania's National Annenberg Election Survey, only 9 percent of Americans believe Republican tax cuts lowered their federal taxes this tax season. Only 1 percent say the tax cuts helped them, and they have not decided which presidential candidate they will support.
"When only one American in 11 thinks his or her taxes were reduced by the tax laws . . . and hardly any of them are swing voters, those impressions strongly imply that the Bush tax cuts are not helping his candidacy very much," said Adam Clymer, the poll's political director.