WASHINGTON – The Senate’s top tax writer on Thursday proposed an extensive tax bill that would make permanent some of the middle-class tax cuts enacted during the Bush administration.
The legislation introduced by Senate Finance Committee Chairman Max Baucus, D-Mont., would protect middle-income taxpayers from the alternative minimum tax and the marriage penalty, would lock in 2009 estate tax rates, and would make permanent the 10, 25 and 28 percent individual income tax rates set in major tax cut legislation passed in 2001.
The measure also would continue current income eligibility thresholds for the child tax credit, which gives families up to $1,000 for every child under age 17.
“Today we’re offering a piece of certainty during an uncertain time for millions of hardworking honest Americans,” Baucus said in a statement.
Baucus did not give a figure for the cost of the plan affecting tax cuts established by the Bush administration in 2001 and 2003 and due to expire in 2010. The cost of adjusting the alternative minimum tax — a tax originally aimed at catching a few very rich tax dodgers that could affect more than 20 million upper-middle-class taxpayers without changes — is estimated at some $70 billion this year.
President Barack Obama has endorsed similar proposals to extend some of the Bush administration tax cuts that benefit the middle class while letting expire tax breaks for those earning more than $250,000.
But it was not clear how the Baucus proposal would fit with Obama administration plans to create a tax policy task force with the intention of recommending major changes in the tax code next year.
Under current law, the estate tax would be eliminated in 2010 but then come back in 2011 at pre-2001 levels. Baucus would make permanent 2009 estate tax rates, which tax family survivors up to 45 percent with an exemption of $3.5 million for individuals and $7 million for couples.