ST. PAUL -- U.S. House and Senate tax negotiators say they face deep differences between the two chambers' approaches.
But Rep. Collin Peterson, D-Minn., says there is no hurry to resolve differences, and a quick decision could increase the federal deficit.
"They ended up cutting taxes considerably more than they cut spending," Peterson of a late Thursday night House action.
The House voted to cut taxes $95 billion in four bills this week, with $56 billion coming Thursday night. The vote was mostly Republicans in favor and Democrats opposed. Minnesota and North Dakota representatives voted strictly along party lines.
The House approved its final tax bill 234-197, giving a bulk of its cuts to capital gains and dividend taxes.
ADVERTISEMENT
The House bill would increase the federal deficit.
"They want tax cuts, but they really don't want to cut spending," Peterson said about House GOP leaders.
Peterson said it is time that Congress balanced its revenue and expenses. Rules that used to require that have been overturned, and a constitutional amendment to mandate balanced budgeting that he supports has gone nowhere.
The Agriculture Committee's top Democrat, Peterson said he supports cutting the capital gains tax like the House bill does. Farmers benefit from the tax break.
The congressman fears GOP leaders will slip their tax cuts into a defense spending bill. If that happens, Peterson and others will face the choice of voting for an unbalanced budget or looking like they don't support American troops.
People earning more than $1 million a year would get 24 percent of the House-passed tax cuts, according to The Tax Policy Center think tank. Those earning $100,000 to $500,000 annually would get more than half, leaving small benefits for those with lower incomes.
While Senate GOP leaders say they want the capital gains and dividends tax breaks like the House passed, the full Senate backed a $60 billion tax reduction more oriented toward families.
The alterative minimum tax, known as AMT, was developed to ensure that rich Americans pay their fair share of taxes. However, since it has not been updated, the tax now threatens 17 million Americans, many in the middle class.
ADVERTISEMENT
The outdated AMT law also affects states like Minnesota that piggyback on federal tax laws. There is a move among Minnesota lawmakers to change the tax next year to provide relief for thousands of taxpayers.
Senators, who passed their tax bill 64-33, voted to update AMT.
"For those who say they care about fiscal responsibility, for those who say they are concerned about the explosion of deficits and debt, here is a chance to prove it," Sen. Kent Conrad, D-N.D., said on the Senate floor before last month's vote.
The House bill focuses on preserving the 15 percent tax rate for investment income in 2009 and 2010 that otherwise will evaporate at the end of 2008. It also would preserve tax cuts scheduled to expire in a few weeks, including popular deductions for state and local sales taxes and tuition, along with a tax credit for low-income savers.
The Senate's version of the bill seeks to temporarily hold back the AMT next year.
The Associated Press contributed to this story.
