Although, as President Barack Obama said, neither side of the aisle got everything they wanted as part of the deal, U.S. lawmakers gave a New Year’s gift to their constituents, working Tuesday to pass a tax bill that will keep income taxes from going up on 99 percent of Americans.
Lawmakers also dealt with issues ranging from alternative energy to the federal farm programs.
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The holiday vote split the Montana congressional delegation, with Democratic Sens. Max Baucus and Jon Tester voting for the bill, hammered out by Democratic Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., in its 89-8 passage in the Senate at 2 a. m. EST Tuesday.
Rep. Denny Rehberg, R-Mont., was one of the 167 representatives, almost all Republican, who voted against the bill 20 hours later. It passed, 257-167, with more than 80 Republicans joining most House Democrats in approving the bill.
Economists had warned that if the nation allowed all tax cuts to expire Jan. 1 and federal spending to be cut across-the-board in the sequestration requirement that followed the Supercommittee’s failure to agree on deficit reduction in 2011, a new economic recession was likely to follow.
The bill pushes back the sequestration spending cuts by two months, giving Congress time to work on finding cuts the lawmakers would prefer to across-the-board cuts, proponents say.
The deal allowed rates to stay lower at a higher income than Obama had called for, with rates going up on couples’ incomes higher than $450,000 rather than the $250,000 the president had campaigned for, and also allows payroll taxes to inch up from rates set under Obama’s administration during the recession last decade. That will impact most working people in the country.
Republicans complained that the Jan. 1 deal, which had significantly less new revenue than Obama had pushed for, has no spending reductions.
Rehberg had not responded to requests for comment made by the Havre Daily News this morning before printing deadline.
After their votes in the Senate, both Baucus and Tester praised the compromise, with Tester adding that more work is needed to improve the federal budget and reduce the national spending deficit.
“This deal is far from perfect, but it provides the tax relief Montanans deserve while preventing irresponsible cuts that would hurt our kids and seniors, ” Tester said in a statement. “This deal is not the big, long-term, bipartisan solution to cut our debt that the American people expect from Congress. I’ll keep working on a responsible plan to cut our debt without jeopardizing our economy. ”
Baucus applauded the compromise after voting Tuesday, including its work in areas outside of the income tax issue.
“My Montana bosses gave me clear marching orders: get it done — and that is what this compromise does, ” he said. in a statement. “It isn’t perfect, but it will protect Montana families from tax hikes and give small businesses the certainty they need to grow and create jobs. Now, we’ve got to hunker down and keep working to create jobs and cut the debt. We have a lot of work ahead of us, but we can get it done. ”
In his release Baucus praised several specific actions of the bill, including its nine-month extension of the 2008 Farm Bill.
The Senate in June passed a new farm bill, followed shortly by a different bill passed by the House agriculture committee. The Republican leadership of the House has not scheduled either bill for debate on the floor.
“The best solution would have been for the House to pass the full Senate Farm Bill, ” Baucus said Tuesday. “But, something is better than nothing, and the extension will help provide a safety-net and certainty our farmers and ranchers can take to the bank.
“Still, we need a more lasting solution, ” he added. “We can’t keep coming back to this every six months or year. That’s no way to run Congress, and it’s no way to treat our farmers and ranchers. So, passing a long-term Farm Bill will be one of my top priorities in the New Year. ”
He also pushed for a permanent extension of reductions to the federal inheritance tax. In his release, Baucus said the bill passed Tuesday would permanently set the exemption to $5 million, with a husband and wife able to combine their exemptions, indexed to inflation. The rate on amounts over the exemption goes to 40 percent.
If the previous exemptions had been allowed to fully expire, values of estates greather than $1 million would have been taxed at 55 percent.
Baucus said several provisions passed in August by the Senate Finance Committee he chairs also were included in the deal:
• Extending a production tax credit that supports wind farm projects including in Montana;
• Extending tax credits that help businesses hire veterans;
• Extending tax credits that reward businesses for hiring new workers;
• Extending tax cuts that encourage investments in small businesses and help small businesses access capital for growth and to hire more workers;
• Extending tax deductions for the cost of college tuition;
• Extending a research and development tax credit for business investment in innovation and new technology; and
• Continuing tax cuts that help farmers and ranchers take advantage of conservation easements.