Good news, bad news on Senate tax vote

Got a tax plan? Present it! It's got as much chance of becoming law this year as the one the Senate passed on Wednesday.

That's right, the U.S. Senate actually moved a piece of legislation.

This is the same body that for months has fallen victim to its procedural rule that allows one side to stymie a bill's consideration because it can't muster the 60 votes required to allow for a straight yes or no vote on a specific issue.

But amazingly, yesterday the Republicans didn't fight the vote on the Democrats' tax proposal.

Wider tax vote implications: Don't plan a conciliation party yet. Things aren't quite as feel good as yesterday's Senate vote might make it seem.

First, the Senate tax bill is worthless legislatively. Per the constitution, all tax measures must come from the House.

And speaking of the House, the Republicans in charge there, including the tax-writing Ways and Means Committee, will make sure that any tax bill that chamber produces is markedly different from the Senate version.

So why didn't the Senate GOP filibuster?

First, such tactics look bad, especially in an election year when the other side has branded you as the party of "no."

There also are the political implications. Many Republicans saw the vote as a way to force Democrats facing tough re-election battles to vote to raise taxes. Exactly which taxpayers might pay is immaterial. The ads will paint the "yes" voter as a taxer.

Democrats, obviously are spinning it the other way. They believe the passage of their bill will give them eventual leverage, both with a public that regularly has told pollsters that it supports higher taxes on the wealthy, and with the House when it considers its own tax bill.

Dueling bills, lawmakers: And just as important, the Republicans got to present their own tax measure to their Senate colleagues.

The GOP version, the Tax Hike Prevention Bill of 2012 (S. 3413 ), would have extended the 2001 and 2003 tax rates (aka the Bush tax cuts) on income, capital gains, dividends and the estate tax, through 2013. S. 3413 failed by a 45-to-54 vote.

The Democrats' measure, the Middle Class Tax Cut Bill (S. 3412 ), contained the key income tax rates that Obama wants. It would increase the tax rates on incomes, capital gains and dividends for families earning more than $250,000. S. 3412 passed by a 51-to-48 vote.

But both bills, like all tax measures before them and those that will follow, are not so clear-cut. If you're interested in specifics, the Tax Policy Center has a good comparison of the two Senate tax bills.

And while the final votes -- May I once again say hallelujah for the Senate actually getting to this point regardless of how disingenuously it was done? Thanks! -- were essentially along party lines, the Democrats remained true to their fractious reputations. Several Democratic members voted for the bill, but still voiced their preference for bumping the tax rate increase threshold to $1 million.

There's also still a lot of talk out there about other tax measures, such as the Bipartisan Policy Center's Debt Reduction Task Force proposal and the overall tax reform suggestions contained in the National Commission on Fiscal Responsibility and Reform, aka Obama's blue-ribbon debt reduction panel.

Or, as I mentioned, perhaps you have some ideas for how our tax code should look. Toss them out there. They are just as likely to be enacted right now as any others.

You also might find these items of interest:

• Republican definition of 'temporary' tax breaks
  depends on your income bracket
• Tiny, but rich, percentage of Americans
  would pay more under Obama tax plan
• $1 million tax rate threshold's possible fiscal, political costs

Comments

[Sunkcosts]

If I thought it would help, I would vote against every incumbent, regardless of party. I doubt it would help though. The archaic rules and political machinations on both sides will continue to prevent real progress in tax code reformation. Blech.