Tax cuts and expanded benefits for the unemployed are at heart of bill pushed by DemocratsBy Stephen Ohlemacher, AP
Thursday, May 20, 2010
Bill aims to expand benefits for the unemployed
WASHINGTON — People who are out of work for long stretches would get expanded unemployment benefits through the end of the year under a bill Democratic lawmakers plan to pass next week.
The bill would also extend, for a year, about 50 popular tax cuts that expired in January. The bill would be paid for, in part, by tax increases on investment managers and some U.S.-based multinational companies.
In response to the BP oil spill in the Gulf of Mexico, the bill would increase taxes on oil companies by $10.9 billion over the next decade to finance the Oil Spill Liability Trust Fund.
House leaders said they plan to vote on the bill early next week, leaving just a few days for the Senate to act before Congress goes on a weeklong vacation for Memorial Day. House leaders had planned to vote this week, but they were still waiting for some cost estimates, and a few issues were unresolved.
Delays in extending the tax breaks have left thousands of businesses unable to plan for their tax liabilities. Delays in passing a long-term extension of emergency unemployment benefits have forced thousands of laid-off workers to live month to month with no certainty of income.
Unemployment benefits for many will start to run out June 2, unless Congress acts. The bill would extend unemployment benefits for up to 99 weeks in many states, at a cost of $47 billion.
Laid-off workers would continue to get subsidies to buy health insurance through the COBRA program through the end of the year, at a cost of $7.8 billion. States would get $24 billion to states to help cover Medicaid costs.
“This is a bill about creating jobs, preventing outsourcing of jobs overseas, closing loopholes that corporations and wealthy individuals (use for) avoiding U.S. taxes and meeting the needs of those who have lost their jobs through no fault of their own,” House Speaker Nancy Pelosi, D-Calif., said.
The bill started as a one-year extension of popular tax breaks, but it has grown into a grab bag of unfinished business lawmakers hope to complete before Memorial Day. The overall cost of the bill will top $150 billion and could approach $200 billion.
Most of that spending would be added to the federal budget deficit, generating opposition from Republicans and unease among some Democrats.
“It really seems to be a deficit extender bill, not a tax extender bill,” said Rep. Dave Camp of Michigan, the top Republican on the House Ways and Means Committee.
The tax cuts, which total more than $30 billion, would be retroactive to Jan. 1 but would again expire at the end of December. They include a property tax deduction for people who don’t itemize, lucrative credits that help businesses finance research and develop new products, and a sales tax deduction that mainly helps people in states without income taxes.
Among the other provisions:
— Increase the 8-cent-a-barrel tax that oil companies pay to finance the Oil Spill Liability Trust Fund to 32 cents a barrel, raising $10.9 billion over the next decade.
—A three-year delay in imposing a scheduled 21 percent cut in Medicare payments to doctors. The cuts would be delayed until 2014, when lawmakers will have to address the issue again. The cost was still being calculated Thursday, but it was expected to be about $60 billion.
—Expansion of the Build America Bonds program, which subsidizes interest costs paid by local governments when they borrow for construction projects, at a cost of $4 billion.
—$1 billion for summer jobs programs, for workers ages 16 to 21.
—$1.5 billion in relief for farmers who suffered crop damage from natural disasters in 2009.
—$4.6 billion to settle long-running class action lawsuits brought by black farmers and American Indians. One lawsuit concerned the government’s management and accounting of more than 300,000 trust accounts of American Indians. The other is a discrimination lawsuit brought by black farmers against the Agriculture Department.
The bill would raise taxes on multinational companies by $14.5 billion over the next decade. It would increase taxes on investment managers, including hedge fund managers, venture capitalists and many real estate investment partnerships, by $18.6 billion over the next decade.
Investment managers typically get a fee to manage funds or assets. They also get a share of the profits earned for investors above a certain level.
Under current law, the profit-sharing fees, called carried interest, are taxed as capital gains, with a top rate of 15 percent. The bill would tax 75 percent of the fees as regular income, with a top tax rate of 35 percent, scheduled to rise to 39.6 percent in 2011.
The tax increase is opposed by the financial services industry.
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