Senate Democrats are considering extending the Bush tax cuts for high-income families by one year, potentially avoiding raising taxes on wealthy Americans amid the fragile economic recovery.
A spokesperson for Sen. Bob Menendez (D-NJ) told FOX Business’s Rich Edson that Democrats are mulling extending the tax cuts on families making more than $250,000. Democrats haven’t made any decisions on the matter and plan to continue to discuss it until it’s brought up in the Senate in September, the spokesperson said.
Continue Reading Below
“There’s still a question” over what will happen to those families earnings more than $250,000 a year, the spokesperson said.
The Obama Administration says it’s sticking to its plan. “We believe the best way to do that is by allowing the tax rate for the top 2 percent to go back to levels seen at the end of the 1990s, a time of remarkable growth and economic strength,” said Treasury Secretary Tim Geithner.
Lawmakers and economists have debated the pros and cons behind extending the Bush tax cuts, especially given recent signs the U.S. economic recovery is slowing. Some have argued raising taxes at this point could hurt consumer spending and business confidence. Others have said raising taxes on only high-income families may not have a big impact on the economy and could help fill the government’s depleted coffers.
Treasury Secretary Tim Geithner weighed in on the debate earlier this week, saying extending the tax cuts would force more borrowing and cause a "$700 billion fiscal mistake."
Senate Republican leader Mitch McConnell disagrees, saying on Tuesday, "We look forward to the debate about raising taxes in the middle of a recession."