Democrats say levies on the wealthy should rise because all income groups should contribute to deficit reduction. Republicans say those tax increases would burden the owners of many companies, leaving them less money to create jobs.
The Democratic bill also would let the top estate tax rate grow to 55 percent next year, with only the first $1 million in an estate's value exempted.
Republicans would renew today's milder 35 percent top rate, exempting the first $5.12 million. Congress' nonpartisan Joint Committee on Taxation says the lower Democratic threshold would affect the owners of 55,200 estates whose existing rates are projected to expire next year — a tiny percentage of Americans, but far more than the 3,600 who would be exposed under the GOP's terms.
Democrats would impose top tax rates next year of 20 percent on dividends and capital gains, two sources of income enjoyed disproportionately by the wealthy. The GOP top rate would be 15 percent.
The GOP bill ignores some tax breaks for low- and middle-income families that Democrats want to extend for college costs; large, some low-income couples and large working families; and for families with children.
All were part of Obama's 2009 stimulus bill, which Democrats say were meant to be permanent but Republicans say were only a short-term response to the recession.
House Speaker John Boehner, R-Ohio, was ready to push legislation through his chamber next week that closely mirrors the Senate GOP measure. Republicans there introduced their bill on Tuesday, accompanied by another measure designed to speed work next year on legislation overhauling the entire tax code.
Eds: AP reporter Jim Kuhnhenn contributed to this report.
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