WASHINGTON – For Sacramento Rep. Doris Matsui, the math is simple: If Congress does not vote to extend tax cuts for families earning less than $250,000 per year, nearly 315,000 Sacramento households – or 98.7 percent of them – will get hit with a tax increase next month.
Those earning between $50,000 and $75,000, the Democrat points out, would pay up to an additional $1,130 in taxes, while those with incomes between $100,000 and $200,000 would pay up to an extra $3,755.
Like most Democrats, Matsui supports President Barack Obama's plan to extend the middle-class tax cuts for most families while denying them to individuals making more than $200,000 and couples earning more than $250,000.
"I believe that's the way we should go. To extend the tax cuts on the upper 2 percent adds significantly to the deficit, and I just can't see that right now," Matsui said.
Most Republicans, including Reps. Dan Lungren of Gold River and Tom McClintock of Elk Grove, are advocating across-the-board cuts, with no income limit.
As the House prepares for a vote today, the tax cut issue is roiling Congress, dominating its lame-duck session.
While many expect the House vote to fail, hopes remain high on Capitol Hill that the issue will get resolved before Christmas. Obama and congressional leaders this week agreed to form a bipartisan group to seek compromise.
At the same time, Republicans declared Wednesday that they would block other legislation until a tax cut deal is made.
Among the possible bargaining chips for a compromise: Make the tax-cut extension temporary, throw in an extension of jobless benefits, and get the Senate to vote on a long-delayed nuclear arms treaty with Russia.
Senate GOP leader Mitch McConnell of Kentucky predicted Wednesday that Democrats will agree to extend the cuts for everyone, but that the length of the extension remains in dispute.
Mara Lee, Matsui's spokeswoman, said Matsui might consider a compromise that allows an across-the-board extension of tax cuts if it's combined with an extension of unemployment benefits. To not extend the jobless benefits, she said, would be "irresponsible." "There may be some room for compromise," Lee said.
McClintock said he could support a compromise for a temporary tax cut extension, as long as it is across the board, but he said he would not back a deal that extended unemployment benefits.
"I understand how desperately those families are feeling right now, particularly this time of year, but the only hope of ending the nightmare of unemployment for them is a job," McClintock said. "And every dollar that is spent to extend temporary relief to the unemployed requires a dollar less for permanent relief for the unemployed, namely a job."
An increasing number of Democrats, such as California Sen. Dianne Feinstein, are hoping to meet in the middle, perhaps by limiting tax cuts to those who earn less than $1 million.
"Middle-class Americans are really struggling right now, but this economy has been very good to upper-income individuals and the well-to-do," Feinstein said. "I don't see the logic in delaying tax cuts for middle-class Americans as part of an effort to make sure that the rich get richer."
Gil Duran, a spokesman for Feinstein, said the senator is open to "a reasonable compromise, provided that it does not give cuts to millionaires."
Lungren said the willingness by some Democrats to consider a $1 million cutoff proves that it's "a gratuitous or arbitrary figure."
"Basically, then it just becomes a game," he said. "Will you take a million? Will you take $2 million? The idea that it's a moving target suggests that they really don't have a principle behind it, it's really political more than anything else."
Some members are concerned about the cost of any tax cut.
"I want to know how they're going to pay for it – I don't care if it's $100 in tax cuts or $3.8 trillion in tax cuts," said Rep. Mike Thompson, D-St. Helena.
Thompson said the cost factor is "not being talked about at all – and it's surprising, given the fact that we just came off this Nov. 2 election, where debt and deficits seemed to be so important to so many."
Lungren said it's time to take a new approach after the Democratic effort to stimulate the economy with increased spending was unsuccessful.
"We tried their way, and it didn't work," he said. "The biggest problem on our national plate is the lack of jobs, and I don't want to do anything that's going to discourage (job growth). I'm just not going to go for it."
Matsui countered that middle-class families have been hit hardest by the recession and deserve the tax relief, adding that there are relatively few wealthy households in Sacramento.
According to Matsui, there are 454 households in the city earning between $500,000 and $1 million and 200 households earning more than $1 million a year.
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