What happens to the Bush tax cuts?
U.S. President George W. Bush addresses a rally at Lafayette Regional Airport in an effort to sell his tax cut plan to the American people 09 March 2001 in Lafayette, Louisiana.
TEXT OF INTERVIEW
JEREMY HOBSON: Results continue to trickle in but we now know that Republicans will take control of the House of Representatives come January.
Before that, however, on in the last day of December, those Bush tax cuts will expire. So what happens now on the tax front?
For answers, we turn to Marketplace's Scott Tong who's with us now live from Washington. Good morning, Scott.
SCOTT TONG: Good morning Jeremy.
HOBSON: So, the Republicans are going to control the House, we know that for sure, what do they want to do with these tax cuts?
TONG: Well, they want to expend them for everybody. Now what we're talking about is income tax cuts that go back to 2001 and 2003 for all of us -- for everyone who pays taxes. If Congress does nothing, those tax cuts expire December 31st, as you said. Incoming Republican majority in the House wants to extend all of them as part of its new tone it wants to set in this town. GOP Congressman John Boehner is the Speaker-to-be
JOHN BOEHNER: While our new majority will serve as your voice in the people's house, we must remember it's the president who sets the agenda for our government. The American people have sent an unmistakable message to him tonight. And that message is: change course.
HOBSON: Alright, Scott so the Republicans in the House want to change course. But we'll still have a Democratic-controlled Senate and obviously the White House as well controlled by Democrats. How does that change the debate on these tax cuts?
TONG: Most Democrats want to extend just some of the tax cuts -- only for households making less than $250,000. If you're income is higher than that, they want the tax cuts to expire and your rate goes up. So we have a couple scenarios here: If the two parties want a deal , they could meet before the new winners come in a lame duck session, that is before the end of the calendar year. And they could extend the tax cuts, say, for some, but not all of the highest earners -- that would be some of the middle ground between the two parties. Or they could wait until the new Congress comes in January with a split Capitol Hill, in which case if they do anything they would have to back-date any extensions in time for tax season in April.
HOBSON: Alright, interesting. We'll be watching. Marketplace's Scott Tong in Washington, thanks.
TONG: You're welcome.