Tax Cut Legislation Blocked in Senate
A bill to provide tax credits to small businesses that hire new workers has been blocked by Senate Republicans after Democrats refused to allow GOP-sponsored amendments on extending the Bush individual income tax cuts.
The small business bill, known as the Small Business Jobs and Tax Relief Act, would have provided a 10 percent income tax credit for businesses that hire new employees or increase wages in 2012. The maximum increase in eligible wages would have been capped at $5 million per employer and the tax credit would have been capped at $500,000. The bill also would have extended 100 percent bonus depreciation for business purchases of plant and equipment.
However, lawmakers bickered over extending the current individual income tax rates, with Republicans insisting on extending them for taxpayers at all income levels and Democrats supporting President Obama’s policy of extending them only for taxpayers earning less than $250,000 a year. Obama gave a speech Monday urging Congress to extend the current tax rates for the middle class (see Obama Urges Extension of Middle-Class Tax Cuts). Republicans wanted to add an amendment to the small business bill to allow the current income tax rates to be extended for another year, but Democrats blocked that move on Wednesday (see Small Business Tax Relief Bill Moves in Senate).
Republicans had also tried to add an amendment containing President Obama’s proposal to extend the current tax rates for only those earning under $250,000, in an effort to embarrass Democrats who are wary of being accused of increasing taxes in an election year. But Democrats blocked that amendment as well, saying that it did not include provisions for the alternative minimum tax, estate tax and dividend tax. Democrats have also said they are still drafting their version of the legislation to extend the tax cuts. They later offered Republicans an opportunity to offer up their amendments for a straight up or down vote without the possibility of a filibuster. But that offer was rejected as the Democrats hold a slight majority in the Senate, and the Democratic proposal was expected to pass, according to The Wall Street Journal.
On Thursday, Senate Republicans blocked the small business bill, which received a vote of 53 to 44, falling short of the 60 votes need to cut off debate. A few lawmakers crossed party lines, with Senators Scott Brown, R-Mass., and Dean Heller, R-Nev., voting with Democrats, and Joe Manchin III, D-W.Va., siding with Republicans, according to the Los Angeles Times.
Senate leaders traded accusations amid the political jockeying. “The legislation Republicans blocked was a common-sense proposal that provided small businesses with two tax cuts designed to create jobs,” said Senate Majority Leader Harry Reid, D-Nev., in a statement. “Under our proposal, small businesses would have received a 10 percent tax cut on the amount by which they increase their payrolls this calendar year. And to help them expand, small businesses would have been allowed to write off 100 percent of the cost of any major equipment or software they purchase. Unfortunately, Republicans played their usual games of obstruction and opposition. There was simply no reason to oppose this bill on the merits, so Republicans manufactured reasons to kill it out of thin air. Republicans claimed they wanted amendment votes, but refused to take ‘yes’ for an answer when I offered them votes on those very amendments. Senator McConnell made it clear that his ‘single most important’ goal is defeating President Obama. It’s sad that the middle class has to suffer for Republicans to achieve their political aims.”
McConnell, for his part, took aim at the Democratic side. “So yesterday the Democrat Majority leader did what the White House told him to: he made sure there wasn’t a vote on a proposal that a President of his own party demanded two days earlier—and then offered a vote today on a bill that isn’t even written, and only if Democrats and Republicans give up their ability to offer amendments to the Reid bill,” McConnell said Thursday. “This is the kind of absurdity you get when you’ve got a governing party that’s more concerned with winning an election than in facing up to the consequences of the President’s failed economic policies. But it gets even more absurd than that—because the Democrat Majority Leader didn’t just block us yesterday from having votes on whether to raise taxes or not. He wouldn’t even let us have a debate about it.”
McConnell noted that the Democrats have still not produced their own legislation to extend the tax cuts. “And yet here’s the Democrat-controlled Senate, blocking votes, blocking debate, and hosting private meetings with the President’s political advisors on political strategy instead of working on serious, bipartisan solutions,” he said. “Last night, Democrat leaders admitted that the bill they wanted Republicans to turn to hadn’t even been written yet. Think about that: the proposal the President announced Monday with so much fanfare hasn’t even been put on paper yet. And yet Democrats wanted us to move to it. Move to what? A speech? This is the level of seriousness we’re seeing from the Democrat-controlled Senate. This is how seriously they take this economy crisis. It’s nothing but a political game to them. If the President has a proposal, we’ll be happy to send an intern down to the White House to pick it up. But we can’t vote on a speech. And, frankly, we can’t continue like this. It’s long past time Democrats at the White House and in the Senate took the lives and challenges of working Americans as seriously as they take politics. It’s time to put childish things aside and get to the business of the people.”