What: All Issues : Fair Taxation : Corporate Tax Breaks, General : HR 976. SCHIP (State Children’s Health Insurance Program) - Motion to allow an amendment by Kyl of Arizona that would extend depreciation tax breaks for leased property/On the motion
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HR 976. SCHIP (State Children’s Health Insurance Program) - Motion to allow an amendment by Kyl of Arizona that would extend depreciation tax breaks for leased property/On the motion
senate Roll Call 304     Aug 02, 2007
Y = Conservative
N = Progressive
Winning Side:
Progressive

This vote was on whether to preserve an amendment by Jon Kyl, R-Ariz., dealing with small business tax breaks.  Kyl offered his amendment to an unrelated bill that would reauthorize and expand the State Children’s Health Insurance Program (SCHIP).  Max Baucus, D-Mont., tried to defeat the amendment with a procedural motion.  Kyl then called a vote in an attempt to head off Baucus’ motion.  This vote was on whether or not Kyl’s amendment would survive.

The amendment itself would extend for three months – through March 31, 2008 – the 15-year depreciation of improvements made on leased property.  When the provision expires, the depreciation time period will go back to 39 years.  Extending the shorter depreciation period would benefit owners of new restaurant buildings and of retail stores owned by chains. Depreciation is an accounting term, often used to calculate tax breaks, that quantifies the expected value lost over time due to the “wear and tear” on something, such as a car.

Kyl said not extending the provision will allow tax code to become inconsistent, as it was before the Senate enacted this fix in the first place.  He said currently new restaurants are allowed to be depreciated over as long as 39 years, but restaurant renovations are allowed to be depreciated over just 15 years.

“What the Senate did was to fix this inconsistency and provide for the same appreciation, a 15-year period, and to extend that again through the end of the year 2008. This applies to things such as convenience stores. A direct competitor of a quick-service restaurant can use the 15-year depreciation schedule for all construction, and it is permanent in our Tax Code. If you have a different kind of restaurant, you don’t have that same tax treatment. The Senate recognized that inconsistency and put that into the law and extended it until 2008.”

Furthermore, Kyl said this is appropriate to do as a “sweetener” for businesses that will be impacted by the minimum wage hike enacted earlier in the year. 

“Remember, we have now imposed the minimum wage burden on small businesses, and they are going to expect some relief so they don’t have to bear all of the expense of it. They expected that relief. They are not going to get it if we are not able to extend it before the end of this year,” Kyl said.

Max Baucus, D-Mont., said he supported Kyls provision earlier, when it was part of a small business and minimum wage package, because it was paid for as part of that bill.  He said this bill is not the appropriate place for small business tax relief. 

“I say to my friends and my colleagues that we will find a time to do this provision.  This costs $5 billion. I do not think it belongs on this bill,” Baucus said.  Baucus then used a procedural motion to attempt to kill Kyl’s amendment on the grounds that it violates the Senate’s rules against increasing deficit spending.

In some cases, when portions of a bill violate certain congressional rules, the bill can be quickly defeated with these procedural motions unless the Senate votes to waive the rule in question.  One of these Senate rules requires that amendments or bills not increase the deficit.  When Baucus moved to have the amendment defeated, Kyl called a vote on waiving that Senate rule for his amendment, which is what this vote was on.

By a vote of 49-50, the Senate rejected Kyl’s request to waive its rules and allow his amendment to go forward.  All but one Democrat present voted against the waiver motion (Evan Bayh of Indiana).  Similarly, all but one Republican present voted for the waiver motion (George Voinovich of Ohio).  The end result was that the waiver motion failed, and as a result Kyl’s amendment that would have extended depreciation tax breaks for new restaurant construction was killed.

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