Paulson Backs Proposed U.S. Tax Cuts

U.S. Treasury Secretary Henry Paulson Tuesday said President George W. Bush’s 2008 budget proposal strengthens Social Security and Medicare.

Addressing the tax-writing House Ways and Means Committee on Capitol Hill, Paulson said the strong U.S. economy, growing around 3 percent, could support the tax cuts in Bush’s $2.9 trillion budget.

The growing economy will increase tax revenues even with tax cuts, he said, and the strong fiscal position will help Congress address long-term challenges, such as strengthening Social Security and Medicare for future generations.

Many congressional Democrats want to scale back the tax cuts, which expire in 2010, and raise taxes on capital gains and higher-income people.

Lawmakers from both parties say they want to permanently reform the Alternative Minimum Tax that disallows many deductions and exemptions and applies to an ever-growing number of middle-class workers. Bush’s budget provides for just a one-year AMT fix.