This was a 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 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. He said that its approval “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 noted that many Americans were facing “harsh realities in addressing the (then) current economic crisis (and) . . . (I)t is vitally important that these tax incentives are extended in order to maintain the economic recovery that has slowly started to take hold in this country.
Arcuri noted that some of the “important tax credits for individuals . . . extended the deductions for tuition and education expenses, helping families send their children to college . . . and extend the increased standard deduction for state and local property taxes so that working families can keep more of their hard-earned dollars for other necessities during these tough economic times.”
He also cited the bill’s “extension of several provisions important to businesses, including the credit for a company's R&D expenditures. Extending the research and development credit is vital to ensuring that American companies remain competitive and on the cutting edge of innovation . . . In the past, the R&D tax credit has lapsed, and Congress has had to retroactively extend it. American companies rely on this credit and upon its continuity so they can adequately plan for their long-term research projects. I support this proactive extension to provide that continuity. . . .”
Arcuri concluded his remarks by saying that: “Supporting this rule and the tax-relief legislation we will consider later today is simple and common sense. We can provide tax relief and incentives to middle class families, spur innovation, retain and create jobs . . . (A)nd we can do it all in a fiscally responsible manner.”
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. He 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.” Diaz-Balart 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 provision in the underlying bill that increased certain taxes to compensate for the revenue lost by the proposed tax deductions. Diaz-Balart noted that the Democrats had claimed that some of the provisions that generated revenue in the bill were effectively “a tax on Wall Street venture funds; but . . . 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.”
He went on to say: “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 rule setting the terms for debating the bill was approved by a vote of 237-182. All two hundred and thirty-seven “aye” votes were cast by Democrats. Nine other Democrats joined all one hundred and seventy-three Republicans and voted “nay”. As a result, the House was able to begin debating legislation extending the tuition tax deduction, the R&D tax credit and several other tax reductions through the 2010 fiscal year.