Senate to Begin Debate on Deal to Extend Bush-Era Tax Cuts, House Threatens Not to Consider In Its Current Form

Following two failed votes in the U.S. Senate Saturday to extend the Bush-era tax cuts only for the middle-class or those making less than $1 million a year, the White House and GOP Congressional leadership Monday struck a deal to extend current tax rates for all taxpayers for another two years with economic stimulus provisions sought by the president.  The Senate is expected to begin consideration of the package as early as today, setting the stage for a potential procedure vote on Saturday, however House Speaker Pelosi today indicated that she would not bring up the bill for a vote in its current form. The deal includes extensions of other current tax measures, the Republicans’ preferred estate tax rate, a 13-month extension of unemployment benefits, and a one-year reduction in employee payroll taxes for Social Security.  In addition, the agreement allows for 100 percent expensing for businesses in 2011, applied retroactively to September 8, 2010, and 50 percent in 2012. AGC supports the package and will be urging all members of Congress to vote for the bill.  The vote on the bill may be counted on our legislative scorecard as a “Key Vote.” While Republicans are largely on board with the deal and are expected to vote for it, the White House has been working this week to win over Democratic leadership and rank-and-file members who continue to express concerns with tax cuts for the wealthy and a more generous estate tax rate.  Still, although a few issues remain unresolved, such as extensions of other already-expired tax measures, no significant changes to the deal are likely at this time. AGC, however, continues to push for an extension of the Build America Bonds program and removal of water infrastructure investment from the state volume caps for the Private Activity Bond program.  Removal of water and wastewater projects from the Congressionally-mandated cap on their volume would free up private money to act as an additional alternative financing mechanism for water infrastructure construction. Although not described in the White House’s fact sheet on the agreement and a source of Democratic fury over the proposal, the White House did agree to set the estate tax rate at 35 percent and exemption levels at $5 million for singles and $10 million for couples through 2013. For more information, contact Karen Lapsevic at 202-547-4733 or lapsevick@agc.org.