07/17/2012 07:06 pm ET Updated Jul 17, 2012

Harry Reid Unveils Tax Cut Plan From Senate Democrats

WASHINGTON -- Senate Democrats fired the latest volley in the battle to claim the high ground on tax cuts Tuesday, proposing a plan similar to President Barack Obama's proposal to let the Bush-era tax rates expire at the end of the year for high earners only.

The Senate bill, a one-year plan proposed by Majority Leader Harry Reid (D-Nev.), would maintain the historically low tax rates for individuals earning less than $200,000 and couples earning less than $250,000.

It would also exempt inheritances under $3.5 million from a 45 percent tax rate, patch the alternative minimum tax that captures more of the middle class every year, continue an investment tax break for small businesses, and extend a slew of other breaks for middle-class families.

The proposal adheres closely to Obama's plan, although it keeps capital gains taxes at 15 percent for individuals earning less than $200,000 and couples earning less than $250,000, and raises them to 20 percent above that level.

The bill answers the Republicans' complaint that when Reid offered to hold a vote on such a plan last week, there was no actual legislation written on which to vote. Republicans want to extend all the Bush-era tax cuts, which were extended once in 2009 and are set to expire at the end of 2012.

Their expiration is part of the upcoming "fiscal cliff" that all sides have been warning about.

"[Senate Minority Leader Mitch] McConnell and his Republican colleagues have made it clear that they think extending tax cuts for millionaires and billionaires is more important than tax cuts for the middle class. Yet, at the same time, they talk about the deficit," said Reid in a statement.

He went on to repeat his offer from last week to hold two votes, one on the Republican plan and another on his bill, with the understanding that there would be no filibusters and a simple majority would carry the day.

"I propose that we skip all the procedural rules, all these hurdles, and cut straight to having those votes," Reid said. "That way we could see whose plan has majority support and make sure that middle class taxes don't increase on Jan. 1st."

A number of Democrats have come out in favor of the GOP plan, but Reid's statement suggests he believes he has at least 50 members of his caucus in the fold.

"If Sen. McConnell can come up with 50 votes for his plan, he, I'm sure, would be happy to have the votes, or at least that's the way I look at it," Reid said.

“So my message to my Republican colleagues is this," he added. "If you want to join Democrats to protect the middle class and avoid this fiscal cliff that we hear so much about, all you have to do is say yes, just say yes to voting on our tax cut plan and the Republicans' plan. Surely, you can at least agree that 98 percent of the families in this country shouldn't see their taxes go up."

Republicans did not seem impressed by the latest move. A spokesman for McConnell described Reid's plan as an effort to hike taxes on 1 million small businesses, designed only to give Democrats political cover.

On Monday, Sen. Patty Murray (Wash.), the head of the Senate Democrats' campaign committee, vowed Democrats would stick to their position and allow all the tax cuts to expire before they would take a GOP deal that they say abandons the middle class.

Murray warned that she would be willing to continue negotiating into 2013, even if taxes went up all around. "[I]f we can't get a good deal –- a balanced deal that calls on the wealthy to pay their fair share -– then I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle-class families under the bus," Murray declared at the Brookings Institution.

Republicans said Murray's statements reveal pure partisanship.

"I think it shows the Democrats for the political animals that they are. Is that blunt enough?" said Sen. Jon Kyl (R-Ariz.) on Capitol Hill Tuesday. "They are willing to throw the entire U.S. economy into another recession just to be able to score some political points."

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.