By a vote of 51-48, the U.S. Senate today approved the Middle Class Tax Cut Act, legislation to extend tax cuts to all Americans for the first quarter of a million dollars of their annual earnings.
U.S. Senator Jack Reed (D-RI), who supported passage of the bill, says extending this tax break amounts to an average savings of $2,200 per Rhode Island family. The legislation also extends critical tax breaks for working families, families with children, and tax credits to help make college more affordable while ending the Bush tax cuts for the wealthiest 2 percent. According to Congress' Joint Committee on Taxation, this bill, compared to the Republican plan, will reduce the deficit by nearly $1 trillion over the next decade.
"This is a relatively fiscally responsible way to help the middle class, boost the economy, and get a handle on the deficit. We must embrace sound fiscal policies that help create jobs in the short-term and help with long-term deficit reduction. Passing this targeted, middle class tax cut is a step in the right direction. My hope is that the Speaker of the House doesn't reject this proposal through a procedural maneuver," said Reed.
The Middle Class Tax Cut Act extends all tax cuts for individuals who make up to $200,000 and for married couples who make up to $250,000. It also extends other tax provisions critical to the middle class -- the American Opportunity Tax Credit, the expanded Child Tax Credit and Earned Income Tax Credit -- that help families afford college, cover their bills and provide for their children.
* The American Opportunity Tax Credit helps middle class families afford college by covering up to $2,500 of the cost of tuition.
* The Child Tax Credit provides hard-working families with $1,000 worth of tax relief for each child under age 17.
* The Earned Income Tax Credit is a refundable credit that offers assistance to working individuals and families who earned less than $49,078 in 2011.
A Republican alternative that would have extended the Bush era tax cuts but raised taxes on 25 million working families was defeated by a vote of 45-54.