- Days left

White House Clashes With House Democrats Over Tax Deal

House Democrats reject Obama's plan to extend the Bush tax cutsPolitical tides can turn quickly and violently, as President Obama found out this week. Fresh off of successful negotiations with Republican leadership on Monday over the tax-cut extension package, Obama received a sharp rebuke from his own party who voted today to reject the proposal.

House Speaker Nancy Pelosi (D-Calif.) released a short, carefully-worded press release confirming that Democrats would continue to oppose the current plan. She vowed, however, to keep working with Republicans to find a solution:
"We will continue discussions with the President and our Caucus in the days ahead. Democratic priorities remain clear: to provide a tax cut for working families, to promote policies that produce jobs and economic growth, and to assist millions of our fellow Americans who have lost their jobs through no fault of their own."
Many Democrats in the House felt that the final package negotiated by the White House was too generous to Republicans, a message that Speaker Pelosi appeared to echo in her remarks. Specifically, Democrats believed that the final compromise offered too many cuts to those at the top while not providing enough relief to the middle class.

Singled out for criticism were changes to the federal estate tax. Republicans wanted a complete repeal of the tax while Democrats were comfortable letting the estate tax revert to pre-2001 legislative levels. Those levels would mean an exemption of $1 million per taxpayer (or, with planning, $2 million per married couple) with a top tax rate of 55%. The final deal, however, provides for an exemption of $5 million per taxpayer (or, with planning, $10 million per married couple) with a top tax rate of 35%, the lowest since 1931.

For its part, the White House insists that the package represents significant relief for the middle class. The administration pointed to a study by the Center on Budget and Policy Priorities which indicated that more than half of the deal benefited the middle class and provided Alternative Minimum Tax (AMT) relief.

Despite the grumbling from the Hill, the President remains optimistic. White House spokeswoman Jen Psaki responded to the controversy by expressing confidence "that the major components" of the tax compromise will pass.

Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

TurboTax Articles

What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

Add a Comment

*0 / 3000 Character Maximum