This was on a motion to move to an immediate vote on the resolution or “rule” setting the terms for debating legislation that extended $30 billion worth of tax reductions through the 2010 fiscal year. Among them were the tuition tax deduction, the R&D tax credit and the deduction for the payment of certain state and local property taxes. The bill for which the rule set the terms for debate also included provisions that generated revenue to compensate for the revenue “lost” as a result of the tax deduction extensions. These revenue-generating provisions tightened tax compliance and increased the tax on compensation paid to hedge fund managers and others.
Rep. Arcuri (D-NY) was leading the support for the rule and the motion to bring it to an immediate vote. He said that approval of the rule “will allow us to bring legislation to the House floor . . . that will not only strengthen our economy by directing tax relief to middle class families and creating jobs at small businesses, but will also do this in a deficit neutral, fiscally responsible way.”
Arcuri argued that this was “needed tax relief in a time when American citizens and American small businesses are beginning to turn the corner (on the most severe economic downturn since the Great Depression).” He also said that the revenue-generating portion of the underlying bill made “commonsense changes” that applied the same rules to the compensation of hedge fund managers as “apply to real estate agents, waiters and CEO stock options.”
Arcuri added “there are many families and businesses . . . that are struggling in the current economic crisis with rising costs of everyday items . . . (and) we face harsh realities in addressing the current economic crisis . . . (W)hile these are challenging times, we simply cannot endlessly borrow our way out of this situation. The legislation we will consider under the rule strikes the necessary balance between continuing the tax incentives that will help families and businesses continue to improve their position while offsetting the cost of extending these provisions.”
Rep. Lincoln Diaz-Balart (R-FL) led the opposition to the rule and to the motion to bring it to an immediate vote. He first noted that he supported the substance of the underlying bill, which was to extend a number of tax-relief provisions. Diaz-Balart then said his opposition was based partly on the fact that he believed “these tax provisions should be made permanent, or that at the very least they should be extended for more than 1 year.” He gave as his primary reason that “year-to-year extensions, while better than no extension, fail to provide the predictability and the certainty that small businesses and families need to plan their budgets.”
Diaz-Balart also said that his opposition was based partly on the provisions in the underlying bill that increased certain taxes to compensate for the revenue lost by the proposed tax deductions. He noted that the underlying bill “would raise the tax rate on investment gains received from an investment services partnership interest, which is currently taxed at a rate of 15 percent, to a rate as high as 35 percent at the end of 2010, and then the tax will rise to 39 percent.”
Diaz-Balart noted that the Democrats had claimed that “this is a tax on Wall Street venture funds; but (in fact) . . . about half of that tax will be paid by real estate partnerships that build apartments, homes and shopping centers in our communities. Those real estate partnerships invest in new infrastructure in our communities and they help create jobs in the construction industry. Yet once this tax hits those partnerships, they may very well reconsider their investment decisions and abandon their partnerships for other investments, further hurting our communities and hampering possible economic recovery.” He added that: “The construction industry has been hit very hard . . . and too many jobs have been lost. What we need to be doing is providing incentives for job growth and investment in the construction industry. Unfortunately, we are doing the opposite with this legislation.”
The motion to have an immediate vote on the rule for this tax legislation was approved by a vote of 239-182. All two hundred and thirty-nine “aye” votes were cast by Democrats. Eight other Democrats joined all one hundred and seventy-four Republicans and voted “nay”. As a result, the House moved to an immediate vote on the resolution setting the terms for debating the legislation extending the tuition tax deduction, the R&D tax credit and several other tax reductions through the 2010 fiscal year.