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mitch mcconnell walking with aide

Senate Minority Leader Mitch McConnell of Ky., walks with an aide on Capitol Hill in Washington Tuesday, Dec. 14, 2010. (AP Photo)

WASHINGTON — The tax package negotiated by President Barack Obama and GOP lawmakers is headed toward passage in the Senate even as House Democrats consider changes to the estate tax.

The bill could be passed and sent to the House by Tuesday. The Senate voted 83-15 Monday evening to advance the package, which would provide a two-year reprieve from tax increases scheduled to take effect on Jan. 1 at all income levels.

“This proves that both parties can in fact work together to grow our economy and look out for the American people,” Obama said. “I recognize that folks on both sides of the political spectrum are unhappy with certain parts of the package and I understand those concerns. I share some of them. But that’s the nature of compromise.”

House Democrats are scheduled to meet in a closed-door caucus Tuesday evening to discuss the package. Last week, House Democratic leaders said they would not schedule a vote on the tax bill without changes to make it less generous to the wealthy.

Assistant Democratic Leader Dick Durbin of Illinois told CBS’ “The Early Show” Tuesday that the wide margin by which the measure cleared the procedural vote should help facilitate its passage in the House.

“I think the House takes notice,” he said, adding that he believes the bill will be passed by Christmas.

Durbin said he understands opposition to the bill from liberal Democrats outraged over the substantial relief given the wealthy in estate tax provisions. “In the spirit of the season, it does say `God bless Tiny Tim and Donald Trump,” he said.

This week, several Democratic leaders said they may settle for a vote on an amendment that would impose a higher estate tax – a vote that would face an uncertain outcome.

“I think, frankly, that ultimately we will pass legislation,” House Majority Leader Steny Hoyer said Tuesday. “The vote in the Senate indicates an urgency that is felt by a broad spectrum that the middle income taxes not be increased come Jan. 1. In order to affect that, you’ve got to pass the bill.”

Hoyer said many House Democrats still have concerns about passing a lower estate tax. But, Hoyer said, killing the package would be bad for the nation’s fragile economy.

“We believe that there are provisions within the bill which are very, very helpful to growing the economy, to step in to assist those who have lost their unemployment insurance,” Hoyer said.

The most sweeping tax cuts in a generation, enacted under former President George W. Bush, are scheduled to expire Jan. 1. The $858 billion package negotiated by Obama would extend them for two years.

It would also renew a program of jobless benefits for the long-term unemployed that is due to lapse within days and enact a one-year cut in Social Security taxes.

“It is a substantial victory for middle-class families across the country who would no longer have to worry about a massive tax hike come Jan. 1,” Obama said. “It would offer hope to millions of Americans who have lost their jobs through no fault of their own by making sure that they won’t suddenly find themselves out in the cold without the unemployment insurance benefits that they were counting on. And it would offer real tax relief for Americans who are paying for college, parents raising their children and business owners looking to invest in their businesses and propel our economy forward.”

At the insistence of Republicans, the plan includes a more generous estate tax provision: The first $10 million of a couple’s estate could pass to heirs without taxation. The balance would be subject to a 35 percent tax rate.

The lower estate tax infuriated some Democrats who were already unhappy with Obama for agreeing to extend tax cuts for individuals making more than $200,000 and couples making more than $250,000.

The estate tax was repealed for 2010. But under current law, it is scheduled to return next year with a top rate of 55 percent on the portion estates above $1 million – $2 million for couples.

House Democratic leaders want to bring back the 2009 estate tax levels. That year, individuals could pass $3.5 million to their heirs, tax-free. Couples could pass $7 million, with a little tax planning, and the balance was taxed at a top rate of 45 percent.

Senate Republicans, however, warned that any changes to the estate tax provisions could unravel the deal.

“If the House Democratic leadership decides to make partisan changes, they will ensure that every American taxpayer will see a job-killing tax hike on January 1,” said Senate Republican Leader Mitch McConnell of Kentucky.

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