WASHINGTON – Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.

Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama’s plans to let some of the Bush administration’s tax cuts expire.

Democratic leaders in Congress still back Obama, but the willingness to raise taxes is waning among the rank and file as the stagnant economy threatens the party’s majority in the House and Senate.

“In my view this is no time to do anything that could be jarring to a fragile recovery,” said Rep. Gerry Connolly of Virginia, a first-term Democrat.

The most sweeping tax cuts in a generation are due to expire in January, and that’s setting up a showdown when lawmakers return from their summer vacations this month. waiting to act on the tax cuts until just before congressional elections in November, Democratic leaders have raised the stakes, politically and for taxpayers.

If Congress fails to act, workers at every income level would face tax increases next year.

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Taxpayers making between $40,000 and $50,000 a year would get hit with an average income tax increase of $923 next year. Those making between $50,000 and $75,000 would face an average increase of $1,126, according to estimates by the nonpartisan Joint Committee on Taxation.

Obama wants to make the tax cuts permanent for middle- and low-income families while allowing them to expire for individuals making more than $200,000 and married couples making more than $250,000.

Republicans want to make all the tax cuts permanent, adding nearly $4 trillion to the national debt over the next decade. Most Democrats in Congress support Obama’s plan, but a growing number have come out in favor of extending all the reductions for a year or two.

“It’s going to be hard to resist a one-year extension for everybody, given the state of the economy,” said Clint Stretch, a tax expert at the consulting firm Deloitte Tax LLP.

The tax cuts were enacted in 2001 and 2003 under President George W. Bush. They provided help for rich and poor, reducing the lowest marginal rates as well as the top ones and several in between. They also provided tax breaks for education, families with children and married couples. Taxes on capital gains and dividends were reduced, while the federal estate tax was gradually repealed, though only through this year.

Connolly said the nation cannot afford to make all the tax cuts permanent, which would add about $3.9 trillion to the national debt over the next decade according to updated estimates from the nonpartisan Congressional Budget Office.

“I would say certainly a year, until we feel more confident about the economic growth of this economy,” he said.

Obama’s plan would let taxes increase by a little more than $38 billion next year, with nearly 80 percent of the increase falling on families making more than $1 million.

 


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