House Speaker John Boehner’s tax idea would cost those with taxable income of more than a million dollars a year an extra hundred thousand dollars in taxes and would not renew several tax cuts for the poor, which would result in them paying more.
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.