Hatch, Republicans challenge tax cut expiration

Published: Wednesday, Dec. 1 2010 6:06 p.m. MST

WASHINGTON, D.C. — Republicans in the U.S. Senate are drawing a line in the virtual sand, vowing to keep all legislation off the Senate floor unless Congress extends the Bush-era tax cuts, which expire at the end of 2010.

All 42 Republicans in the Senate — including Sen. Orrin Hatch, R-Utah, who will become the ranking minority member of the Senate Finance Committee in January — signed a letter written to Senate Majority Leader Harry Reid, D-Nevada.

"We're not doing anything the last part of this week," Hatch said Wednesday morning on Fox News, adding there's "no reason not to solve" the problem of the expiring tax cuts.

Hatch said the impact from the expiration of the tax cuts would be huge, both to individuals and to the economy as a whole.

"If we don't solve it, the GDP (Gross Domestic Product) will take about a 1.7, almost 2 percent hit, which would be catastrophic to jobs, to our economy, to our competition in the world and so forth," Hatch said. "My suggestion is that they kick it over until after the next Presidential election, then we can really think about it and make the right decisions, instead of doing some slap-dash thing here at the last second."

The flip side of the argument is the cost to the federal government. Allowing the Bush-era cuts to expire costs the government nothing, but extending all of the cuts would come with a $3.9 trillion price tag. An Obama administration compromise would allow the cuts to expire for only the top tier of high-income wage earners but would extend the cuts for the middle class.

A preliminary report this summer from the nonpartisan Joint Committee on Taxation found raising just the lowest income tax rate from 10 percent to 15 percent would impact 88 million taxpayers to the tune of $503 next year.

If the tax cuts expire, they would also lower the child tax credit from $1,000 to $500 per child in 2011, affecting an estimated 31 million families. The expiration of the cuts would also mean the reinstatement of the "marriage penalty" tax, a quirk in tax code that means some married couples pay more in taxes than they would if they stayed single, affecting around 35 million couples.

The move by Republicans could keep several bills from moving in the rest of the lame-duck session, including a measure to repeal the military's "Don't Ask, Don't Tell" policy on openly homosexual service members.

A statement from Reid's office described the letter as politics as usual.

e-mail: bbruce@desnews.com

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