Senate Democrats pushing tax cuts for business

In this May 17, 2012 photo, Sen. Charles Schumer, D-N.Y. ges­tures dur­ing a news con­fer­ence on Capi­tol Hill in Wash­ing­ton. Democ­rats want to push tax cuts through the Sen­ate for com­pa­nies that hire new work­ers, give raises or buy major new equip­ment this year. With nei­ther party eager to let the other claim campaign-season vic­to­ries, the ulti­mate fate of the roughly $29 bil­lion leg­is­la­tion seems dubi­ous. Debate was to begin Tues­day, though it was pos­si­ble Repub­li­cans would use pro­ce­dural block­ades to quickly derail the mea­sure. (Asso­ci­ated Press File | Susan Walsh)

ALAN FRAM

Asso­ci­ated Press

WASHINGTON — Sen­ate lead­ers of both par­ties belit­tled each other’s tax cut­ting plans Tues­day as Democ­rats tried advanc­ing leg­is­la­tion that would lower levies for com­pa­nies that hire new work­ers, give raises or buy major new equip­ment this year.

With nei­ther party eager to let the other claim campaign-season vic­to­ries, the ulti­mate fate of the roughly $29 bil­lion leg­is­la­tion seemed dubi­ous. Democ­rats were hop­ing to begin debat­ing the mea­sure, though it was pos­si­ble that Repub­li­cans, who pre­fer broader tax changes like some approved by the GOP-led House, would use pro­ce­dural block­ades to quickly derail the measure.

“Their approach is com­pletely dif­fer­ent than ours,” said Sen­ate Major­ity Leader Harry Reid, D-Nev. “Con­gres­sional Repub­li­cans want to lav­ish huge across-the-board tax breaks on bil­lion­aire hedge fund man­agers and peo­ple like mega-rich celebri­ties like Don­ald Trump.”

Sen­ate Minor­ity Leader Mitch McConnell, R-Ky., aimed his fire at Pres­i­dent Barack Obama, who prod­ded Con­gress on Mon­day to extend wide-ranging tax cuts — sched­uled to expire in Jan­u­ary — for most tax­pay­ers but let them expire for house­holds mak­ing more than $250,000 annu­ally. Democ­rats say the rich should con­tribute to deficit reduc­tion, but Repub­li­cans say the higher taxes would affect many busi­ness own­ers and make it harder for them to cre­ate jobs.

“The pres­i­dent has a night­mar­ish eco­nomic record, a night­mar­ish eco­nomic record,” McConnell said. “By demand­ing higher taxes on the few, he’s try­ing to dis­tract from it.”

Sen­ate Democ­rats’ leg­is­la­tion would grant tax cred­its — which are sub­tracted from a company’s tax bill — equal to 10 per­cent of the amount its 2012 pay­roll exceeds the salaries it paid in 2011. The max­i­mum credit would be $500,000, a fig­ure that would dis­pro­por­tion­ately help smaller businesses.

It would also let com­pa­nies that buy major new prop­erty in 2012, such as machin­ery, deduct the entire cost of the pur­chase this year. Cur­rently they can only deduct half the amount.

In an elec­tion year in which the slump­ing econ­omy gives Obama and the Senate’s major­ity Democ­rats lit­tle to boast about, the pro­posal lets Democ­rats take the offen­sive on the tax issue while assert­ing they are try­ing to encour­age job cre­ation. The bill was reach­ing the floor days after the lat­est gloomy Labor Depart­ment report that a scant 80,000 jobs were cre­ated last month, leav­ing the unem­ploy­ment rate at a rugged 8.2 percent.

“This tax cut is by no means a cure-all, but it could be a difference-maker for small firms on the fence about adding pay­roll,” said Sen. Chuck Schumer, D-N.Y. “After last month’s slug­gish jobs num­bers, we may be on the verge of a rare moment of agree­ment on how to help the economy.”

Repub­li­cans want all the expir­ing tax cuts to be renewed and have opposed Demo­c­ra­tic efforts to omit the high­est earn­ers, say­ing that would hurt businesses.

“If my friends on the other side of the aisle truly care about small busi­nesses, as I know they do, then they should join us in stop­ping these tax hikes that will hit those very same peo­ple if the pres­i­dent has his way,” Sen. Orrin Hatch, R-Utah, top Repub­li­can on the Sen­ate Finance Com­mit­tee, said of Obama’s pro­posal and the Sen­ate Demo­c­ra­tic bill. “If small busi­nesses need help then the best thing we can do is stop all the tax increases.”

House Speaker John Boehner, R-Ohio, plans for a House vote on renew­ing all those tax cuts later this month. Reid, D-Nev., is likely to hold a Sen­ate vote in July on Obama’s pro­posal to renew the expir­ing tax reduc­tions for all but those earn­ing more than $250,000.

It was unclear whether Repub­li­cans would demand oppor­tu­ni­ties to reshape the busi­ness tax cuts or to force votes on other top­ics as the price for let­ting debate begin on the Demo­c­ra­tic bill.

The leg­is­la­tion con­trasts with a $46 bil­lion mea­sure Repub­li­cans pushed through the House in April grant­ing 20 per­cent tax deduc­tions to all busi­nesses with fewer than 500 employ­ees — more than 99 per­cent of the nation’s com­pa­nies. It drew a veto threat from Obama and has gone nowhere in the Senate.

McConnell praised such mea­sures on Tues­day, say­ing, “Let’s focus on the kind of pro-growth jobs pro­pos­als the Republican-led House has already passed.”

Both mea­sures were unpaid for, mean­ing that if enacted, their price tags would make fed­eral deficits bigger.

Both par­ties sup­port the tax breaks for equip­ment pur­chase, though crit­ics have ques­tioned their job-creation poten­tial because they say they would cut taxes for com­pa­nies that would have bought items anyway.

Posted by AP News on Jul 10 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.