The US House of Representatives last week voted to make permanent a measure passed in President Bush’s 2001 tax cut package which reduced the lower tax bracket to 10% from 15%.
If enacted, the bill will ensure that first $7,000 of an individual’s income ($14,000 for a couple) will be subject to the 10% tax rate beyond the current 2010 expiry date for the measure.
The legislation would also prevent a reduction in this threshold to $6,000 for individuals and $12,000 for couples due next year (returning to current levels in 2008).
The bill passed with a comfortable majority in a 344-76 vote, and will cost the Treasury $218 billion over ten years.
The action was praised by US Treasury Secretary John Snow who urged the Senate to also pass the measure.
“I applaud their vote to prevent a tax increase on the nearly 94 million people who benefit from the lowest 10% bracket. This action will bring greater fairness and simplicity to the tax code,” he commented.
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