House makes tax cuts permanent

WASHINGTON -- The House reminded voters Thursday that tax cuts have fattened their paychecks, voting to cement the lower taxes from a broadened bottom bracket.

The tax cut is one of three that Congress plans to extend before they expire at the end of this election year. The House already voted to lock in tax cuts for married couples and plans to vote next week to preserve the $1,000 child tax credit.

Senate tax-writers plan to combine all three into one bill.

The tax bracket bill, passed 344-76, makes permanent the bottom tax bracket created in 2001, when the tax on the first $6,000 in earned wages was lowered from 15 percent to 10 percent. In 2003, Congress expanded the bracket to cover the first $7,000 earned.

"Today's actions help fix the inequities in our tax code and create more fairness for our lowest income earners," said House Speaker Dennis Hastert, R-Ill.

The bracket is to shrink back to $6,000 next year and disappear entirely in 2011. Republicans said 73 million taxpayers can expect to pay higher taxes next year if the broadened bottom bracket is not extended.

House Democrats gave the bill strong support despite worries it would worsen budget deficits at a time of war. The bill cuts taxes more than $218 billion over a decade.

"This is financial madness," said Rep. John Tanner, D-Tenn. "Our country is engaged in a death spiral financially."

The House rejected, 227-190, a Democratic alternative that would have kept the expanded bottom bracket in place through 2010. To cover the tax cut's cost, Democrats wanted to levy a 1.9 percent surcharge on individuals who earn $500,000 or more and on couples who earn at least $1 million.

Democrats would have stipulated that, after 2010, the bottom bracket would have remained in place only if White House budget officials projected the federal balance would be balanced by 2014.

Republicans said that clause would have forced lawmakers to give up their rights to set tax policy.

"You are saying the (White House) Office of Management and Budget is going to be the crossing guard that is going to prevent legislating going forward," said Rep. Clay Shaw, R-Fla.

In other congressional action, small businesses would be able to band together through national trade associations to offer insurance for their employees under a bill that passed the House for the second time in two years.

The legislation was approved 252-162, despite opposition from critics who said older, less-healthy workers could be left out and that the White House-backed bill would waive states' minimum coverage standards by giving oversight of group health insurance plans to the federal government.

The measure has scant chance of becoming law this year because of the opposition of key Republican and Democratic senators. Governors, state attorneys general, the AFL-CIO and the Blue Cross and Blue Shield Association, a major provider of coverage for small businesses.

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On the Net:

Information on the tax bill, H.R. 4275, and the insurance bill, H.R. 4281, can be found at http://thomas.loc.gov