Extending temporary tax breaks passed

by Linda Beale
Harry Reid’s office announced that the final vote on the “American Workers, State, and Business Relief Act of 2010 (HR 4213), which will extend $31 billion in temporary tax breaks will take place on Wednesday Mar 10 (at the request of the GOP). The Senators voted today to cut off debate (66-34) and let the vote take place. (Rdan…the bill passed 62-35)

The JCT’s “estimated Revenue Effects of the Revenue Provisions Contained in the President’s Fiscal Year 2011 Budget (JCX-7-10) is up on the committee’s website, with some pretty amazing figures that should convince every single blue dog Democrat and “fiscally conservative” Republican (if there really are any of that nature) that the best thing to do for the country would be to let the Bush-era tax cuts slide into permanent oblivion as they are slated to do under current law. Extending those tax cuts for ten years will cost a whopping $2.5 trillion. Those cuts include:

$238 billion to maintain very low capital gains and divdiends rates (mostly of value to wealthy who receive most of the capital income);

$25.6 billion to maintain the increased “expensing” under section 179 (purported to stimulate growth, but amounting to a huge business tax cut that does not make sense under the income tax and does nothing to cause more investment, since businesses will just get the expensing cut for equipment they’d buy anyway)
more than $1.7 trillion to maintain the lower individual income tax brackets

$359 billion for extension of the child tax credit, refundability and AMT rules
$359 billion for so-called “marriage penalty relief”
$18.4 billion for education incentives

$253 billion for extate tax revisions (extending the 2009 law that permits estates of $10 million to be passed tax free and taxes even multibillionaire estates at only 35% on the amount above the exempted amount)
Everything else in the bill is almost small-change by comparison. Indexing the AMT, though, is more than half a trillion–and again, that goes primarily to the upper crust (though not the very wealthiest, who still pay regular tax instead of AMT)–those with $200-500 thousand in income a year. Hard to justify paying through the nose to give tax breaks to the upper crust, while the same people that pushed these 2001-2003 tax cuts through continue to say that absolutely necessary health care reform is “too costly.” because of the creation of deficits. That’s hypocrisy, folks.

The tax measures in the purported “temporary recovery measures” cost just less than $100 billion and include many provisions that are not going to do anything to stimulate the economy, in all likelihood, such as more expensing provisions for small businesses, more bonus depreciation for certain properties, and more tax credits for certain types of investments.

Additional “tax cuts” touted in the budget are similarly hard to justify since they increase the “consumption tax” features in the income tax–expanding the “saver’s credit” is a too costly $27 billion over ten years; and expanding the “american opportunity tax credit” is another $58 billion.

The “tax cuts for businesses” include two items that should hit the trash heap–hopefully Sandy Levin is going to toss these out:

almost $8 billion for eliminating capital gains taxation on investment in small business stock (this will be just another tax break to equity funds and all those hugely wealthy investors, not a break for little businesses or little guys)
$70.5 billion for making the research & experimentation credit permanent- (this is another item that doesn’t belong in an income tax–letting companies get a credit for R&D means that something that is just a normal cost of business is treated as reducing the tax owed on a dollar for dollar basis. That’s a nutty policy to put in place, but it is something that the corporations have lobbied for year after year after year, and Congress keeps giving it to them)
The biggest revenue raiser is capping itemized deductions, which would garner almost $300 billion over 10 years, but the Dems in Congress have practically rolled over on that one already.

[hat tip to taxprof]

Rdan here: Final vote passed the bill.