The Bush tax cut and unemployment benefit extension legislation passed a key procedural hurdle in the Senate on Monday, overcoming the 60-vote threshold needed to come up for a vote later in the week.
The measure advanced Monday evening by a vote of 83 to 15, with 45 Democrats and 37 Republicans voting to invoke cloture and cut off debate. A final vote on the legislation is expected on Tuesday in the Senate, and then it will be sent to the House.
The status of the $858 billion bill in the House is in question, however, as a majority of House Democrats voted in a resolution within their caucus last week to express their disapproval of the bill.
Many congressional Democrats are upset that President Obama struck a deal with Republican congressional leaders to extend the Bush-era tax rates for two years even for those earning over $250,000 a year, violating a campaign pledge. Another possible deal breaker is that the estate tax will be set at 35%, with a $5 million exemption for individuals, instead of the 55% rate for estates over $1 million that it was scheduled to return to at the beginning of next year. Democrats will try to introduce amendments to increase the estate tax and add other provisions, but Republicans have warned that they are not open to allowing many changes in the legislation.
The bill includes some provisions that are seen as favorable trade-offs by the Obama administration, including a 13-month extension of unemployment benefits and a 2% cut in the Social Security payroll tax for a year, lowering the rate from 6.2% to 4.2% .
The bill also extends the Research & Experimentation Credit, the Child Tax Credit, the Earned Income Tax Credit, and the American Opportunity Tax Credit for college tuition, along with patching the alternative minimum tax to prevent it from affecting millions more taxpayers. Obama has argued that it is necessary to pass the legislation to extend tax cuts for the middle class and avoid jeopardizing the economic recovery.
This story has been reprinted with permission from Accounting Today.
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Corrected December 14, 2010 at 10:43AM: yes