Menomonie (WQOW)- The Bush-era tax cuts are set to expire, and lawmakers are arguing over whether to extend those cuts to the wealthiest Americans.
The Senate voted last week to extend the tax cuts to everyone except those making more than $250,000 a year. But on Wednesday, the House voted to extend the cuts to all Americans, no matter how much you make.
Republicans and Democrats agree the Bush-era tax cuts should be extended.
"We don't believe we should have a tax increase right now, especially with this lag in the economy," says Congressman Sean Duffy (R).
But Democrats say those who make at least a quarter million dollars a year shouldn't be included.
"The top 1%, they would get a tax relief too for the first $250,000 of income that they earn. It's just that bonus tax break that they get on top of it. If you don't allow that, that would bring in about $800 billion," Congressman Ron Kind points out.
Congressman Duffy says that plan could hurt small businesses at a time when they can least afford it.
"The small business and the small manufacturer in central Wisconsin is going to get a tax hike," Congressman Duffy explains. "They are going to pay more in taxes and it's going to be more difficult for them to compete."
Congressman Kind disagrees.
"The non-partisan Joint Committee on Taxation has come out and said 97% of small businesses aren't affected at all with what President Obama is advocating," Congressman Kind says.
So what is the impact of the tax cuts on jobs and economic growth? Dick Tyson, an economics professor at UW-Stout, says since the bush tax cuts went into effect, they've had a minimal impact on economic growth.
"The growth rate was 2.3%, which long-run, the trend is about 3 to 4% so it has been pretty meager," explains Tyson.
And its profits, not tax savings that will lead to more hiring.
"Profits, which are basically the net income that they are taxed on, are a residual," Tyson points out. "If there's an investment that's going to bring in more revenues than cost, it would be pretty foolish to walk away from it."
Lawmakers say they are going to continue to debate this issue and try to find a compromise that works for both sides.
But that's easier said than done. President Obama says if the House plan to extend tax cuts to all Americans makes it to his desk, he won't sign it. Back in 2010, President Obama did extend for two more years those same tax cuts to everyone.
