House in ‘Struggle’ to Find Votes for Middle-Class Tax Cuts

At least six Democrats in the U.S. House said today that they would oppose or were leaning against legislation that would extend Bush-era tax cuts on the first $200,000 of an individual’s annual income and the first $250,000 of a married couple’s.

Representatives Artur Davis of Alabama and Earl Pomeroy of North Dakota said that they would vote against the measure because it would result in higher marginal rates for high-income taxpayers starting in January. Representative Michael McIntyre of North Carolina, who favors extending the tax cuts to all taxpayers, said he was still studying the issue.

“If all the bill does is extend one class of tax cuts and not others, I’ll vote ‘no,’” Davis said.

He said other Democrats felt similarly. “It’s clear that they are struggling to find the votes for it,” he said.

Davis and Pomeroy are leaving the House at the end of the lame-duck session. Davis ran for governor in Alabama and lost in the Democratic primary; Pomeroy lost his bid for re-election on Nov. 2.

Democrats Jim McDermott of Washington, Lloyd Doggett of Texas and Michael Thompson of California said they may oppose the measure because it would add more than $3 trillion to the deficit.

“I think it’s a problem if it’s not paid for,” Thompson said. The legislation is exempt from budget-balancing rules, meaning that it doesn’t require offsetting tax increases or spending cuts to pass.

House Vote Scheduled

House Majority Leader Steny Hoyer, a Maryland Democrat, has scheduled a vote on the measure for tomorrow, and the Rules Committee was expected to set parameters for debate today.

The legislation would extend the lower tax rates for individuals with annual incomes of $200,000 or less and married couples filing jointly with an annual income of $250,000 or less. House Republicans will oppose the measure, as they want the lower rates to be extended for all taxpayers. Without action by Congress, the tax cuts will expire Dec. 31.

Democrats currently have a 37-seat majority in the House. In September, 47 House Democrats sent a letter to House Speaker Nancy Pelosi of California, urging retention of the 15 percent tax rate on dividends and capital gains for high-income taxpayers; that same month, 31 House Democrats wrote Pelosi seeking an extension of the lower tax rates for all income levels.

Under the legislation, the capital gains rate for the highest-income taxpayers would revert to 20 percent and their dividends would be taxed at the top marginal rate, which in 2011 is scheduled to be 39.6 percent.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net; Peter Cohn in Washington at pcohn@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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