December 10, 2010
UPDATE: The Senate passed the tax cuts package this morning (Wednesday, December 15) by a vote of 81-19; the House is expected to take up the bill for debate tomorrow.
A controversial package of legislation negotiated by President Obama with Republican legislators, including a 2-year extension of the Bush-era tax cuts for all income levels as well as a 13-month extension of long-term unemployment benefits, is likely to pass the Senate nearly intact next week, despite opposition on both sides of the aisle.
The Senate is debating the bill (HR 4853) today. Sen. Bernie Sanders (I-VT) began a filibuster on the measure this morning, though Senate Majority Leader Harry Reid (D-NV) is expected to be able to marshal the 60 votes necessary to overcome the filibuster and pass the bill. The vote to cut off debate on the package is scheduled for 3 p.m. on Monday, December 13th.
The Senate bill, which closely mirrors Obama’s compromise agreement, would extend the expiring 2001 and 2003 tax cuts for two years, extend long-term jobless benefits for 13 months, and reinstate the estate tax at the Republican-preferred rate of 35 percent on estates worth more than $5 million. The bill does not have a final price tag from the Congressional Budget Office, but the tax portion alone is expected to cost over $800 billion over ten years, including $68 billion for the lowered estate tax rate.
The package is expected to face a much greater challenge in the House, where the Democratic caucus yesterday passed a non-binding resolution urging House leaders to keep the bill from coming to the House floor until further revisions are made. House Democrats are particularly anxious to extend tax cuts only to those making $1 million or less a year, to increase the proposed estate tax rate, and to add a paired set of provisions to the package extending tax credits for ethanol production as well for renewable energy and energy efficiency.
“If we can do the ethanol thing that Republicans want, and we can do the green jobs thing that Democrats want, bring it on,” House Majority Whip James Clyburn (D-SC) told CQ Today.
Under the Senate bill, the ethanol production tax credit would be extended at the current level of 45 cents for 2011 only. The Senate bill also extends the biodiesel tax credit for 2011. Ethanol forces see the extra year at current rates as an opportunity to then work with the new Congress to try to shift some of the expenditures on the credit to subsidies for the building of distribution and marketing infrastructure. The House has yet to add these tax incentives to the package.
The estate tax deal between the President and Republican leaders is considerably more generous — no tax at all until the estate of a couple exceeds $10 million (and considerably higher in reality after gifting and other tax avoidance mechanisms come into play) and then at a 35 percent rate — than the earlier bipartisan plan for $7 million and 45 percent. Last gasp attempts to change the Obama-negotiated formula by congressional Democrats appear to be focusing now on the rate and not the amount.
Either way, it is bad news for the structure of agriculture, ensuring that farm consolidation and agricultural concentration continues across generational time frames, with increased pressure on land prices and fewer new farming opportunities as a result.