WASHINGTON – The Internal Revenue Service official at the center of the storm over the agency’s targeting of conservative groups told Congress on Wednesday that she had done nothing wrong in the episode, and thenWASHINGTON – Democrats pushed a yearlong extension of tax cuts for all but the highest-earning Americans through the Senate on Wednesday, giving Democrats a significant political victory on a measure that is nevertheless fated to go no further in Congress.
Senators approved the bill by a near party-line 51-48 vote. Minutes earlier, lawmakers voted 54-45 to kill a rival Republican package of tax reductions.
The $250 billion Democratic measure would extend tax cuts in 2013 for millions of Americans that otherwise will expire in January. But it would deny those reductions to individuals making more than $200,000 yearly and couples earning at least $250,000.
With control of the White House and Congress at stake in elections less than four months off, passage of the Democratic bill aligned the Senate with the tax-cutting vision of President Obama.
The vote also served as a counterpoint to the GOP-run House, which next week will approve tax cuts nearly identical to the $405 billion Republican plan the Senate rejected Wednesday.
“With the Senate’s vote, the House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98 percent of Americans and nearly every small business owner,” Obama said in a written statement after the vote.
Republican Sens. Dan Coats and Richard Lugar of Indiana voted for the GOP tax cuts and against the Democrats’ version.
During remarks on the Senate floor, Coats objected to a Democratic provision that would increase the top tax rate paid by people who inherit estates to 55 percent, exempting the first $1 million in an estate’s value. The GOP measure would have maintained the current 35 percent top rate and would not have taxed the first $5.12 million of an estate’s value.
Coats said the Democratic bill would “impose a 55 percent death tax on people who are already being taxed to death.”
He said farmers and small-business owners “resent being called rich” by Democrats and are “being classified as some type of elite group that’s not paying their fair share.” Coats added that for those taxpayers, their asset value “is in machines, it’s in buildings, it’s in land.”
Under the Democratic measure, individuals earning over $200,000 and couples making at least $250,000 would see their top rates rise from 33 percent and 35 percent today to 36 percent and 39.6 percent in January.
Democrats would impose top tax rates next year of 20 percent on dividends and capital gains. The GOP top rate would have been 15 percent.
Brian Francisco of The Journal Gazette contributed to this story.
