Washington, DC -- Congressman Neil Abercrombie voted today against a Republican tax bill that primarily benefits wealthy taxpayers at the expense of middle class families while adding $81 billion to the federal deficit.

The centerpiece of the GOP’s Budget Reconciliation tax bill (H.R.4297) is its extension of the capital gains and dividend tax cut from 2008 to 2010.  The distribution of taxable capital gains and dividends is highly skewed toward upper-income tax returns, with those making under $50,000 a year collectively receiving only 3.2% of the capital tax cut value. Taxpayers making more than $200,000 a year receive 80% of the capital gains tax cut value.  Those with incomes above $1 million receive over 50% of the tax cut value.  

The measure increases the tax burden and complexity on nearly 17 million more middle-class working families next year by failing to extend the higher exemptions for the Alternative Minimum Tax (AMT) that expire this year. Nearly one-third of taxpayers making $75-100,000 per year will be subject to the AMT next year.

The bill would also add $81 billion to the federal deficit over 10 years. After years of borrowing to pay for tax cuts for the wealthy and reconstructing Iraq, Republicans are now cutting programs that primarily serve the most vulnerable Americans in order to pay for their tax cuts, all while the national debt exceeds $8 trillion and the cost of interest on the debt will average over $300 billion a year during the next decade.

Abercrombie voted for a Democratic alternative that offered fiscally responsible tax cut extensions that benefit the middle class.  The alternative would extend the higher exemptions for the AMT another year. It would also extend for an additional year other tax cuts that expire in 2005.  The Democratic alternative offsets the full cost of those extensions by reducing the size of the President’s tax cuts on incomes over $1 million for joint returns, and $500,000 for individual returns.

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