A key Democratic senator who is drafting legislation that will permanently extend Bush era tax cuts only for the middle and lower classes says he intends to update his colleagues on where things stand in a special Democratic caucus meeting on Thursday.

When asked if he would unveil the bill as early as Thursday, Senate Finance Committee Chairman Max Baucus, D-Mont., said it was "possible," though a senior Senate Democratic leadership aide cautioned that could be too early.

The chairman said he is still working with the Joint Tax Committee on the price tag of the bill.

For those in his caucus who want to extend all of the Bush tax cuts, including those for the wealthy, Baucus said, "Well, we're just going to have to have a vote."

Baucus is writing the bill in consultation with Majority Leader Harry Reid, D-Nev., and says in addition to making the tax cuts permanent, his bill will propose to bring capital gains and dividend tax rates to 20 percent, a move Baucus calls "only fair."

There will also be a mini-Alternative Minimum Tax patch, but Baucus cautions that Democrats are likely not able to extend that break for any longer than two months.

Democrats have written their so-called "PAYGO" rules, which mandate that certain items must be paid for with offsets so as not to increase the deficit, in a way that they do not have to pay for either the middle class tax cuts or any changes in the capital gains tax.

They must pay for any changes in the tax on dividends, and must only partially pay for changes in the estate tax.