taxmoneySenate Democrats narrowly pushed through a measure to extend tax rates for family income up to $250,000 for a year, as both parties continued their election-year messaging war on taxes.

By a 51-48 tally, Democrats overcame two defections to win passage of a measure that would also raise the top rate on capital gains and dividends, as well as continue several targeted tax provisions that Democrats say help the middle class.

Vice President Biden presided over the tally. He was in the Senate chamber in case his vote, as president of the Senate, was needed to break a tie.

Earlier in the afternoon, the Senate turned aside a Republican proposal, by a mostly party-line vote of 45-54, that would have extended all current rates on income, capital gains, dividends and the estate tax, also for a year. Two Republicans, Sens. Susan Collins (Maine) and Scott Brown (Mass.), voted against their party, and Sen. Mark Pryor (D-Ark.) voted with the GOP. Pryor is up for reelection in 2014.

Although the Republican bill was unlikely to pass the Senate and the Democratic bill is unlikely to make headway in the Republican-controlled House, leaders of both parties wanted to send an election-year message on tax rates and display party unity.

In the second vote, Senate Democrats lost the votes of the two members of their caucus who had already hinted they would vote no — retiring Sens. Joe Lieberman (I-Conn.) and Jim Webb (D-Va.).

Lieberman took to the Senate floor on Wednesday to say that both the Republican and the Democratic plan amount to a punt at a time of trillion-dollar annual deficits. Webb, meanwhile, said that he would not support increasing taxes on ordinary income, but believed that rates for capital gains could go higher.

But Democrats were able to hang on to votes from other potential fence-sitters, including Sens. Joe Manchin (D-W.Va.) and Ben Nelson (D-Neb.), who both voted against a similar proposal in 2010.

Sens. Claire McCaskill (D-Mo.), Jon Tester (D-Mont.), Bill Nelson (D-Fla.) and Kay Hagan (D-N.C.), all of whom face potentially difficult reelection campaigns either this year or in 2014, also backed their party’s proposal.

The votes came following a topsy-turvy morning in the Senate, in which Minority Leader Mitch McConnell (R-Ky.) consented to allowing straight up-or-down votes on the two tax plans. The Senate had been scheduled to hold a procedural vote on just the Democratic plan, which would have needed 60 votes to advance.

McConnell, speaking on the Senate floor Wednesday morning, suggested his move was meant to smoke out potentially vulnerable Democrats, and make them put their cards on the table.

“The American people should know where we stand,” McConnell said. “Today they will."

For his part, Senate Majority Leader Harry Reid (D-Nev.) has said for weeks that he believed he could muster a majority for his tax plan, and Democrats have called for dealing with the rates at the top income levels down the road.

With Wednesday’s vote, a Democratic aide said, the chamber had upped the pressure on the House, with President Obama now being able to single out Republicans — and not just Congress — for not passing tax relief for the middle class.

“Why don’t we pass this now, give real relief to the middle class, and have the other debate later?” Sen. Charles Schumer (D-N.Y.) said.

The two votes amounted to little more than election-year theater, with Vice President Biden’s decision to preside over proceedings adding to the spectacle.

Both Republicans and Democrats are trying to deliver their message to voters before November and sparring for the upper hand in advance of the post-election lame-duck sessions — when most of the substantive decisions on big-ticket tax and fiscal issues are expected to be made.

For starters, measures that raise revenues are, under the Constitution, supposed to start in the House, and McConnell objected on Wednesday to a request from Reid to fix that issue.

Democrats noted Wednesday that Republicans had allowed bills dealing with transportation and the Federal Aviation Administration to move forward, even though they could have been tripped up by the same problem.

But either way, the GOP-controlled House is also expected to hold its own vote next week on a measure that, similar to the Senate Republican bill, would essentially extend all Bush-era rates for a year. The House is also not expected to embrace the Democratic proposal, and is pushing for legislation to force a comprehensive revamp of the tax code next year.

Before Wednesday’s vote, Republicans and Democrats also continued their broadsides, with each side accusing the other of holding tax relief hostage for political gain.

“All sides agree on the need to extend the tax cuts for the middle class — this legislation reflects that consensus,” the Obama administration said in a policy statement.

GOP lawmakers, meanwhile, have accused Democrats of seeking a tax hike on small businesses, and said that the current sluggish economy should convince policymakers not to raise anybody’s taxes at the end of the year.

Republicans on Wednesday also continued to attack Democrats for leaving the estate tax out of their tax proposal, with the tax’s parameters scheduled to get much less generous at the end of the year.

Senate Democrats had been calling to reinstate 2009 estate tax levels, which have also been endorsed by Obama. But with some Democrats suggesting they prefer the current estate tax policy, party leaders dropped the proposal from their plan.

Sen. Orrin Hatch (Utah), the ranking Republican on the Finance Committee, and other GOP lawmakers have said that the Democrats’ decision could ensnare many more family farms and small businesses.

“It might be hard to believe, but this proposal is even worse than President Obama’s,” Hatch said Wednesday.

Democrats, meanwhile, continued to blast Republicans for not proposing to continue expansions of provisions like the Earned Income Tax Credit and the American Opportunity Tax Credit, incentives they say give needed assistance to families raising children and trying to cope with education costs.

“Why would the Republican proposal today want to raise taxes on families with children?” Durbin said on the floor Wednesday. “If they can find a tax break for the wealthiest, can’t they find one for families with children?”

Link to the original article on The Hill

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