Obama’s $858 billion tax-cut plan heads to US House

* House set to take up tax bill on Thursday

* Bill prevents taxes from rising for nearly all Americans

By Kim Dixon and Donna Smith

WASHINGTON, Dec 16 (BestGrowthStock) – A deal that President Barack
Obama struck with Republicans to extend tax cuts for nearly
every working American and spur job growth moves to the U.S.
House of Representatives for passage as early as Thursday.

Many of Obama’s fellow Democrats in that chamber strongly
oppose the measure as favoring the wealthy, and are still angry
with him for cutting the deal with Republicans without them.

“We have a situation where we have a proposal before us
that gives 6,600 families in America $25 billion and holds the
rest of the provisions in the bill, (such as) low-income tax
cuts, hostage to that blackmail,” House Speaker Nancy Pelosi
said on Wednesday, referring to a provision on the estate tax.

Still, most analysts believe the deal, which has already
received overwhelming bipartisan approval in the Senate, will
pass the House with substantial backing from Republicans and
some Democrats.

The legislation would extend for two years income tax cuts
enacted under Republican former President George W. Bush, with
Democrats backing off their earlier fervent opposition to
extending the cuts for the richest Americans. The Bush-era cuts
are due to expire at the end of 2010 unless Congress acts.

The measure would also prevent a spike in taxes on capital
gains and dividends, renew long-term unemployment insurance and
provide new tax relief for students, working families and
businesses.

House Democrats are becoming more resigned to passage of
the $858 billion package. Experts predict the measures will
probably boost economic growth but add to the $1.3 trillion
budget deficit, which has unsettled the bond market.

Most of the 255 House Democrats may oppose the overall tax
package, but it is expected to be approved with overwhelming
support among the chamber’s 179 Republicans.

ONE POINT GDP BOOST

Obama on Wednesday called on the House to approve the bill
“as soon as possible” to avoid tax increases across the board
in January.

Many economists predict the tax package could add up to 1
percentage point to economic expansion next year, due partly
to a one-year cut in the payroll tax and removal of uncertainty
about taxes in general.

Obama’s current position on taxes contrasts sharply with
his position earlier this year when he and his fellow Democrats
fought against renewing tax reductions for the wealthiest
Americans — those with household incomes above $250,000 —
while supporting continued cuts for middle-class taxpayers.

At the time, they said that with budget deficits at record
levels, the United States could not afford to give the tax
breaks to the wealthiest.

But with Republicans drawing a line in the sand on the
issue and scoring major victories in Nov. 2 congressional
elections — taking control of the House and making gains in
the Senate — Obama acquiesced on tax cuts for upper-income
Americans.

Democrats did win their desired extension of unemployment
benefits, which were expiring for millions of people shut out
of jobs in the lackluster economy.

Particularly irksome to Democrats is a provision raising
the exemption threshold for the estate tax from $3.5 million in
2009 to $5 million, and cutting the estate tax rate from 45
percent to 35 percent.

Democrats will likely try to change the tax bill with an
amendment on the estate tax, though Representative Earl
Pomeroy, the Democrat sponsor of a steeper estate tax proposal,
told Reuters it was “unclear” if such a vote would pass.

He said Democrats will try because “some things are worth
fighting for.” He then noted: “I will say this. … People want
to get home and you know sometimes, heading to the gate is a
pretty powerful impetus to pass packages.”
(Reporting by Kim Dixon; editing by Todd Eastham)

Obama’s $858 billion tax-cut plan heads to US House