January 2, 2013

Congress approves new taxes on richest in 'fiscal cliff' deal

The drawn-out 'fiscal cliff' drama ends as the House of Representatives postpones automatic spending cuts and signs off on higher tax rates for the wealthy.


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Today's poll: Fiscal cliff

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Speaker of the House John Boehner, R-Ohio, center right, and House Majority Leader Eric Cantor, R-Va., center left, head for a Republican conference meeting to discuss the "fiscal cliff" bill Monday in Washington.


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President Barack Obama and Vice President Joe Biden make a statement regarding the passage of the fiscal cliff bill in the Brady Press Briefing Room at the White House Tuesday.

The Associated Press

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"I think the best outcome is to have a clean bill, actually put it on the floor and see what the consensus of the House is," said Rep. Raul Labrador, R-Idaho, a freshman who has opposed every major bipartisan compromise on the budget over the past two years and said he would vote against the measure.

If approved by the House, the bill would proceed to the White House for Obama's signature. It calls for the top tax rate to rise immediately from 35 percent to 39.6 percent on income over $450,000 for married couples and $400,000 for single people.

The measure would protect more than 100 million families earning less than $250,000 a year from significant income tax increases set to take effect this month -- although their payroll taxes will rise with the expiration of a temporary tax cut adopted two years ago.

In addition to avoiding much of the fiscal cliff, the measure would extend federal dairy policies through September, averting a threatened doubling of milk prices. The measure also would cancel a scheduled pay raise for members of Congress.

After weeks of partisan bickering over whether taxes should increase for anyone, the compromise bill rolled through the Senate early Tuesday in a highly unusual New Year's Day vote. The vote was 89 to 8, with both parties offering overwhelming support.

The moment served as a rare bipartisan coda to what has been one of the most rancorous, partisan Congresses in recent history. The 11 senators who are retiring received hugs and kisses from their colleagues. The current Congress ends at noon Thursday, when the new Congress will be seated, and lawmakers would have been forced to scrap the fiscal cliff legislation and start over.

Three Democrats voted against the measure: Tom Harkin of Iowa, Thomas Carper of Delaware and Michael Bennet of Colorado.

Bennet complained that the bill would do little to reduce record budget deficits. According to the nonpartisan Congressional Budget Office, the measure would cause the national debt to be $4 trillion higher by 2022 than if all of the cliff's tax increases and spending cuts had been allowed to take effect.

Five Senate Republicans also rejected the measure, including tea party favorites Rand Paul of Kentucky, Mike Lee of Utah and Rubio.

But 40 others voted for it, including such Republican leaders on tax-and-spending policy as Sen. Patrick Toomey of Pennsylvania and Ronald Johnson of Wisconsin, a tea party star who frequently consults with House conservatives.

Neither party was entirely happy with the bill. While conservatives complained about new taxes and a lack of spending reductions, liberals complained about its provisions regarding inherited estates.

Although the tax rate would rise from 35 percent to 40 percent, estates worth as much as $5 million -- $10 million for married couples -- would go untaxed. And an inflation adjustment would guarantee that the size of the exemption would grow to $15 million for couples by the end of the decade.

Still, House Democrats largely embraced the measure, which was negotiated by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., and endorsed by Obama. After receiving a point-by-point 90-minute briefing from Biden on Tuesday, Democrats rallied around the package.

"It's long overdue for us to have this solution to go forward and remove all doubt as to what comes next for our country," said House Minority Leader Nancy Pelosi, D-Calif.

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Today's poll: Fiscal cliff

Whom do you hold responsible for the protracted fiscal cliff fight: Democrats, Republicans or both?



Both parties

View Results


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