The Senate voted to consider a $15 billion job creation bill after five Republican senators agreed to overcome a filibuster on the measure, which would provide tax breaks to companies that hire and retain employees.

The procedural vote came after Senate Majority Leader Harry Reid, D-Nev., decided to scale back an $85 billion bipartisan package that included extensions of expiring tax breaks, unemployment insurance and COBRA subsidies (see Reid Scales Back Senate Jobs Bill). He said that he plans to offer those provisions in separate legislation later this session.

The bill now advancing in the Senate, known as the Hiring Incentives to Restore Employment (HIRE) Act, offers an exemption from Social Security payroll taxes for every worker hired in 2010 who has been unemployed for at least 60 days. There would also be an additional $1,000 income tax credit for every new employee retained for 52 weeks that could be claimed on an employer’s 2011 income tax return.

The bill also retains a provision extending the 2008 and 2009 Section 179 expensing thresholds, allowing taxpayers to elect to write off up to $250,000 of certain capital expenditures for equipment (subject to a phase-out once the expenditures exceed $800,000) in 2010, in lieu of depreciating those costs over time.

Other provisions would extend the Highway Trust Fund to allow states and localities to invest more in infrastructure through the rest of the year, and expand the Build America Bonds program to allow state and local governments to borrow at lower costs to finance more infrastructure projects through a federal government subsidy.

The payroll tax proposal came from a bipartisan pair of senators, Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah. Hatch did not vote to advance the bill, nor did Senate Finance Committee ranking member Charles Grassley, R-Iowa, who had introduced the bipartisan $85 billion package with Senate Finance Committee chairman Max Baucus, D-Mont.

However, five Republicans did vote to advance the bill: newly arrived Senator Scott Brown, R-Mass., along with Olympia Snowe, R-Maine; Susan Collins, R-Maine; and two retiring Senators, Christopher Bond, R-Mo.; and George Voinovich, R-Ohio. Sen. Ben Nelson, D-Neb., was the only Democrat to vote against advancing the bill.

Republicans complained that they were not allowed to introduce amendments to the bill, and that Reid had rejected a bipartisan package after originally supporting it. The fate of the extensions on expiring tax breaks such as the Research and Development Credit remains uncertain, along with other provisions in the original package, until separate legislation is introduced in the Senate.

“What’s impressive is the list of expired and expiring measures that aren’t addressed in the bill,” said CCH principal federal tax analyst Mark Luscombe. “These include the COBRA subsidy, which expires at the end of this month, expired provisions for teacher’s classroom expenses, deductibility of state and local sales tax, the extra standard deduction for real estate taxes, the higher education deduction and a host of business provisions. Add in the expired estate tax, a lowered alternative minimum tax exemption and the upcoming sunset of the Bush tax cuts at the end of this year, and it looks as though Congress will have a lot on its plate even if this bill becomes law.”

CCH has issued a Special Tax Briefing on the Senate legislation.

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