HARTFORD, Conn. (AP) — The state’s two candidates for the U.S. Senate agree many of the numerous tax cuts set to expire on Jan. 1 should remain on the books, but they part ways when it comes to extending certain reductions for wealthier taxpayers.
The Tax Policy Center warned this week that taxpayers across the income spectrum will be hit with tax increases totaling more than $500 billion if the president and federal lawmakers fail to renew a laundry list of expiring cuts.
The roster includes tax cuts enacted during the administrations of President Barack Obama and former President George W. Bush. They include higher rates, reduced deductions and credits and an exemption for the alternative minimum tax. It works out to be an average tax increase of nearly $3,500 per household, according to the center.
Democratic U.S. Rep. Chris Murphy and Republican Linda McMahon support extending many of the tax reductions, including a 2 percentage point reduction in Social Security taxes that was championed by Obama, despite the fact it was supposed to be temporary and there appears to be little conversation in Washington, D.C., about extending it.
According to the report from the Tax Policy Center, allowing the 2 percentage point payroll tax to expire would reduce workers’ paychecks by $115 billion next year.
McMahon’s spokesman Todd Abrajano told The Associated Press this week, ‘‘She would not let that expire.’’
Murphy said Thursday that he supports ‘‘extending that tax cut and finding a way to make sure that Social Security remains solvent.’’
Taxes are a hot issue in the election for the seat being vacated by the retiring Sen. Joe Lieberman, an independent. A Quinnipiac University Poll, which shows the race is a dead heat, found voters are evenly split on which of the candidates better understands the economic problems of people in Connecticut. Forty-six percent said McMahon while 45 percent said Murphy.
Murphy has criticized McMahon’s plan for keeping the Bush-era tax cuts in place for higher-income earners. In his TV ads, he alleges McMahon, a wealthy former wrestling executive, would personally benefit by $7 million. He argues that that money would be better spent paying off debt and funding programs for the middle class, such as education, job training, college affordability, infrastructure and job creation.
Like Obama, he supports keeping cuts in place only for families earning less than $250,000 a year.
‘‘You don’t grow jobs by just giving tax cuts to millionaires,’’ Murphy said at a small discussion with several Hartford-area businessmen on Thursday. ‘‘You grow jobs by investing in our people and creating more college graduates who create businesses, who find new discoveries, who invent new products to sell around the world.’’
McMahon has repeatedly said it doesn’t make sense to raise taxes on anyone, given the slow economy.
‘‘You don’t raise taxes when the economy is so sluggish,’’ she said recently. When the economy improves, McMahon said, she ‘‘absolutely would call for and support adjustments to those individuals who are wealthier, including myself, to pay more tax’’ so long as the revenue would reduce the deficit or debt and not underwrite more spending.
Besides extending existing tax cuts, McMahon’s plan also calls for reducing the middle-class tax rate from 25 percent to 15 percent. Her campaign said that would help a family of four with an annual income of $125,000 to save $500 a month.
Murphy campaign spokesman Eli Zupnick said McMahon says she supports cutting taxes for the middle class but her plan to continue the reductions for the wealthy ‘‘would threaten the deductions middle-class families depend on and end up actually increasing their overall taxes.’’ But Abrajano said McMahon only targets corporate deductions, not those taken by families.
John Dunham, owner of the New York-based economic consulting firm that scored McMahon’s economic plan, said that when it is considered in its entirety, it is ‘‘slightly revenue positive.’’
The scoring did not take into account, however, McMahon’s support for extending the payroll tax reduction, he said.
Steven Lanza, executive editor of The Connecticut Economy, acknowledged that tax cuts for the middle class ‘‘certainly can stimulate the economy.’’ But he said the country ‘‘can’t continue on with the existing tax regime, which isn’t raising anywhere near to what we’re spending every year.’’
Another tax cut set to expire is the higher exemption, or patch, from the alternative minimum tax, which was created in 1969 to prevent wealthy taxpayers from avoiding paying taxes and now affects a broader spectrum of families. Murphy supports extending that patch while McMahon’s economic plan calls for repealing it.