UPDATE 3-Divisions among Dems over tax cuts for affluent

* Lower tax rates expire at year-end with no action

* Pelosi, White House favor keeping cuts for middle class

* Part of debate over deficit-cutting versus stimulus
(Adds detail on House positions; paying for tax cuts; Nelson)

By Kim Dixon

WASHINGTON, July 22 (BestGrowthStock) – U.S. House of
Representatives Speaker Nancy Pelosi on Thursday affirmed her
support for letting lower tax rates for wealthier Americans
expire at year-end, despite opposition by several Senate
Democrats who say the economy is too fragile for higher taxes.

Fiscally conservative Senate Democrats Evan Bayh, Kent
Conrad and Ben Nelson all have said they believe lower tax
rates for all income groups should be renewed when they expire
at the end of the year.

Pelosi said that does not change her position.

“Our position has been that we support middle-income tax
cuts. The tax cuts at the high end have increased the deficit
enormously,” she said.

Her comments are part of a broad debate over whether to
renew tax cuts enacted in 2001 and 2003 under former President
George W. Bush that are set to expire at year-end. President
Barack Obama and many congressional Democrats want to extend
the lower rates for individuals earning less than $200,000 or
couples making less than $250,000, but not for those earning
more.

At the center of the debate among Democrats is whether
economic stimulus or deficit reduction should be the top policy
priority.

About 2 to 3 percent of Americans fit into the upper income
categories.

Conrad said the first priority should be to extend the
middle-class rates, acknowledging that the wealthier are less
likely to spend the extra cash. But he said he is convinced the
recovery is too uneven to raise taxes on the wealthy now.

“The weight of economic advice that’s been given to me says
.. now is not the time to pivot in terms of raising taxes or
cutting spending,” Conrad said.

There are also some Democrats in the House who have said
they want to postpone raising taxes for wealthier individuals
for two years.

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A spokesman for Nelson said: “He supports extending the
expiring tax cuts at least until the economy is clearly
recovering and supports addressing them before the fall
elections.”

There is a guessing game going on in Washington as to when
the Democrats will address the tax issue. Some believe they
will wait until after the November elections to avoid being
accused of raising any taxes before voters head to the polls.

Because of budget rules, lawmakers need to find off-setting
revenue to fund extending the lower rates for those in upper
income groups, but not for the so-called middle class and under
categories.

Conrad suggested waiving the budget rules to extend the tax
cuts for higher-income Americans should be considered.

Nelson, who voted against a bill on extending unemployment
benefits, citing concerns about the deficit, backs using unused
funds from the $862 billion economic stimulus to help fund
extending the lower rates for the wealthy.

Republicans back extending the tax cuts for all income
groups and some have argued that deficits are acceptable if
they fund tax cuts.

Pelosi noted Republicans tried to block the unemployment
benefits extension by arguing that there should be funding for
it, but not for the tax cuts for the wealthiest.

“We have a clear distinction here. If we want to lower
taxes for the middle class, reduce the deficit and create jobs,
extending the tax cuts at the high end are not in furtherance
of reaching those goals.”

Investment Analysis
(Additional Reporting by Susan Cornwell; Editing by Eric Walsh
and Dan Grebler)

UPDATE 3-Divisions among Dems over tax cuts for affluent