Republican Senator Chuck Grassley says now is not the time to raise taxes on anyone, while Roxanne Conlin — Grassley’s Democratic opponent — accuses Grassley of siding with the upper class.
When congress returns to Washington next week, Democrats and Republicans will debate a proposal to extend most of the Bush-era tax cuts. The Obama Administration supports such a move and may propose other tax cuts for investment in “clean energy” and for businesses that hire new workers. But Senator Grassley says he and fellow Republicans will oppose the package because it would raise taxes on American households that have annual incomes above a quarter of a million dollars.
“This is going to be a major issue when we get back, probably a couple of weeks of the September session are going to be devoted to taxes and all 41 Republicans are of the position that we should not increase taxes during a recession,” Grassley says, “that it would be the very worst thing that we could do.”
Democrats say 98 percent of Americans would retain their tax cut under the Obama plan and income taxes would only go up for American couples who earn more than $250,000 annually or for individual Americans with an annual income of $200,000 or more. Democrat Roxanne Conlin, Grassley’s November opponent, says the middle class needs to keep its tax cuts.
“Congress should let the Bush tax cuts remain for 98 percent of the American people,” Conlin says. “But for those at the very top, those families earning more than $250,000 a year, a tiny tax increase of three percent will not hurt them and will help us by beginning to get the federal deficit under control.”
About 18,000 Iowa households — amounting to about 1.3 percent of all taxpayers in Iowa — would pay higher taxes under Obama’s plan. Grassley says raising taxes on anyone during a recession is unacceptable.
“It’s going to be very detrimental to the economy,” Grassley says.
The tax increase on those top earners would “depress” the economy, according to Grassley. “Fifty percent of the income — not 50 percent of the small businesses — 50 percent of the income over $200,000 comes from small business,” Grassley says. “Small business operates on cash flow. When you tax that cash flow to a greater extent as it will be done if you follow the president’s wishes, it’s going to take that money out of expansion and the creation of jobs in small business.”
Conlin rejects that argument. “Less than two percent of the returns reporting more than $250,000 worth of income have any business income on them at all — none, zero, zip,” Conlin says.
Grassley predicts all 41 Republican senators will be united on this point, however, along with a handful of Democrats who say they want to extend all the Bush-era tax cuts.
Conlin says deficit reduction is crucial and the tax proposal Democrats are advancing would help cut the deficit by $800 billion. “It is the height of hypocrisy to scream about the deficit when what we’re trying to do is extend unemployment insurance to people who out of work and then say, ‘But my friends making $250,000 a year or a million dollars a year or a billion dollars a year should not have to endure the horror of a three percent raise in their taxes,'” Conlin says. “I think that’s absurd.”
Roxanne and James Conlin are among the American couples with an annual income above $250,000 and it’s likely Senator Grassley and his wife are as well, although Grassley’s campaign would not confirm that. Grassley’s base senate salary is $174,000 and Barbara Grassley is listed as a “full-time” employee at a Washington, D.C. lobbying firm, with duties ranging from crafting legislative strategy to message development and organizing client conferences. Both Grassleys are also eligible for Social Security benefits.