Senate votes solidly to extend tax cuts

WASHINGTON — A controversial compromise to extend Bush-era income tax cuts for millions of taxpayers won overwhelming approval in the Senate on Wednesday, deflating chances for a revolt by House Democrats who say it is too generous to the wealthy.

Wavering House Democrats, angry that President Obama agreed to Republican demands on the legislation, said there had been little movement toward making significant changes to the bill. The measure is scheduled for a vote in the House today.

Just over a week after Obama unveiled the tax compromise, the Senate voted 81-19 to approve the measure — handing the president a major victory in the year-end, "lame duck" session of Congress. Forty-four Senate Democrats and 37 Republicans supported the proposal.

"This vote brings us one step closer to ensuring that middle-class families across the country won't have to worry about a massive tax hike," Obama said in a statement.

The vote also put the fate of the measure in the hands of House Democrats, who have been cool to many of its provisions. Democrats voted last week not to bring the bill to the floor without making changes.



Rep. Peter DeFazio, D-Ore., who has helped lead opposition to the measure, called it a "raw deal."

The Senate bill, which would cost $858 billion over 10 years, would extend income tax cuts for two years, create a one-year, 2-percentage-point cut in payroll taxes and continue jobless benefits for the long-term unemployed for 13 more months.

"We must compromise in order to extend help to those who are struggling in this economy," said Sen. Sherrod Brown, D-Ohio, who had criticized the proposal, but who ultimately voted to support it.

Some House Democrats, including DeFazio, have objected to extending the tax cuts for families earning more than $250,000 in taxable income. Others have blasted a provision to allow couples to pass up to $10 million onto their heirs tax free. Estates above that level would be taxed at 35%.

House leaders were set to allow a proposed amendment to trim the threshold on tax-free estates to $7 million for couples and increase the tax rate to 45%. The amendment, which faces a steep climb in the House, would send the bill back to the Senate for another vote if approved.

Senate Republicans, including Minority Leader Mitch McConnell of Kentucky, have warned against making changes to the bill.

A group of Democrats, including Texas Rep. Lloyd Doggett, said they also oppose the provision to reduce Social Security payroll taxes next year. They said they are worried Congress will extend that break indefinitely, undermining the program.

"This was presented to us as a take-it-or-leave-it deal," Doggett said, adding that little progress had been made on changing the bill.

If Congress does not act, the cuts will expire Jan. 1, affecting virtually every taxpayer. A family with an income of $63,366 would see its federal income tax rise $1,540, according to the non-partisan Tax Foundation.

"At the end of the day," said Rep. Henry Waxman, D-Calif., "we're going to pass a bill."

Several conservative Democrats lined up behind the agreement. Thirty-one members of the centrist Blue Dog Democrats signed a letter asking leaders to "send it directly to the president's desk without delay."