An amendment to a highway transportation bill that would have extended expired tax credits such as the Research and Experimentation Credit in exchange for freezing the salaries of federal employees for another year has gone down to defeat in the Senate.

The amendment, introduced by Sen. Pat Roberts, R-Kan., failed to reach the 60 votes needed to be added to the surface transportation bill on Tuesday. The amendment would have frozen not only federal employees’ pay, but also of members of Congress and their staff. The federal workforce is already in the midst of a two-year pay freeze that is set to expire in December. Federal employee unions opposed the amendment, arguing they should not be expected to continue to bear the cost of unrelated tax breaks.

“Rejecting this amendment is clear evidence that many members of the Senate understand the need for shared sacrifice among every group in our society, rather than turning to federal employees for even greater contributions, especially to fund matters unrelated to the federal workforce,” said NTEU President Colleen M. Kelley in a statement.

Roberts’ amendment would have extended the research tax credit along with other popular tax breaks, including expired tax incentives for energy production, tuition tax credits, the adoption tax credit, deductibility of state and local taxes, tax incentives for leasehold improvements and restaurant depreciation, and enhanced small business expensing. More controversially, it also would have extended tax breaks for rum imported from Puerto Rico and the Virgin Islands and for owners of motor sports entertainment facilities.

“I believe this amendment is an important first step in growing our economy,” Roberts said when introducing the amendment last Wednesday. “It contains many, but not all, of the critical tax relief provisions that should be extended to protect families and businesses from higher taxes. Until we reform the Tax Code, Congress should extend expired tax provisions.”

The technology industry was disappointed with the failure to extend the research tax credit.

“The American economy relies on research and innovation to stay ahead of the world,” said Information Technology Industry Council president and CEO Dean Garfield in a statement.

“For many years, the federal government encouraged industries to stay on the cutting-edge with a tax credit for research and development. Yet, as we climb out of one of the worst recessions in our history, that provision and other key job-creating incentives have lapsed. Today, Senators from both parties supported a proposal that would have restored these tax incentives and helped to kick-start job creation. The research-and-development tax credit, the CFC look-through exception, and the active finance exception would keep American businesses competitive with rivals around the world. As the discussion moves forward, we hope that more Senators will come together quickly to approve these targeted, focused tax incentives to help American industry put American workers back on the job.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access