Do moderate Republicans in the Senate really make a difference? That's the $369 question.
On April 28, the House of Representatives voted 323-95 to fix permanently the inequities in the U.S. tax code that force some 30 million married couples to pay higher taxes than their single counterparts. Without congressional intervention, the so-called marriage penalty-temporarily eliminated just last year-would once again rear its ugly head in 2005, forcing many married couples to pay an extra $369 in taxes, according to statistics from the Tax Foundation.
Despite the huge margin of victory in the House, however, a similar bill is going nowhere in the Senate, where a handful of moderate Republicans have joined with Democrats to stifle tax-cutting efforts. The Senate budget requires lawmakers to offset any new tax cuts with spending cuts or tax hikes elsewhere in the system, neither of which is a popular option in an election year. Such restrictions could be waived, but only with a supermajority of 60 senators-a number that can't be reached as long as GOP moderates side with Democrats.
So far, negotiations between the two chambers have done little to break the impasse. "There will be automatic tax increases based on what the Senate has done, at this moment in time," predicted House Budget Committee Chairman Jim Nussle (R-Iowa).
The increases are automatic because several provisions of the massive 2001 Bush tax cut are set to expire in 2005. For skittish politicians, that's the perfect scenario: Rather than cast an actual, on-the-record vote to raise taxes, they can achieve the same result by simply doing nothing.
"Nothing doing" said the far more conservative House Republican leadership. They hope their action on the marriage penalty, followed by additional tax-cut bills scheduled weekly through the middle of May, will force a recalcitrant Senate to take action. In coming weeks, the House will vote on raising the child tax credit to $1,000; permanently expanding the 10 percent tax bracket; and permanently reining in the Alternative Minimum Tax (AMT) that is taking an ever-bigger bite from middle-class taxpayers.
Without action by both houses of Congress, millions of Americans will feel the pinch starting next year. The AMT, for instance, originally intended to affect only the wealthy, threatens to hit 3 million middle-income filers next year unless Congress raises the threshold for paying the tax. By 2010, an additional 30 million people could be faced with the AMT.
The impact of the marriage penalty would be felt even sooner. Some 30 million married couples immediately saw their taxes drop dramatically when Congress voted to repeal the marriage penalty in 2003 fully, rather than phasing in relief over nine years. Unless the Senate acts, however, those same 30 million couples will immediately see their taxes jump again next year. That's because, like so many other tax-relief measures, liberals insisted on sunsetting the 2003 marriage penalty law: Starting in 2005, the full repeal of the marriage penalty is to be replaced by the original phased-in timetable. That timetable slowly reduces the marriage penalty year by year, so that married couples don't finally achieve tax equity again until 2009.
Even then, married couples had better not become too wedded to the idea of tax fairness: If the Senate doesn't follow the House's lead, the full marriage penalty is scheduled to reappear in 2011.