This was a vote on passage of the 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 also included provisions to generate revenue to compensate for the revenue “lost” by the tax deduction extensions. These revenue-generating provisions tightened tax compliance and increased the tax on compensation paid to hedge fund managers and others.
Supporters of the bill claimed it would strengthen the economy by directing tax relief to middle class families and creating jobs at small businesses. Rep. Neal (D-MA), a member of the tax-writing Ways and Means Committee, noted that the 2010 fiscal year had already begun and: “There are provisions here in the bottom of the ninth inning, with two out, that are expiring; and we need to give some predictability to decisions that will be made by businesses and individuals over the course of the next year.” Neal said that the bill extends several “popular incentives” and particularly referenced the continuation of the R&D tax credit that “is critical to retaining American jobs.” He also claimed that the bill “does no harm to the federal budget (because the) cost of these (extended tax) cuts is completely offset by . . . revenue raisers . . . (which, among other things) will shut down abuses by wealthy taxpayers . . . .”
Opponents of the legislation had consistently said they supported the tax reduction extensions, but focused their opposition on the provisions that increased certain taxes to compensate for the revenue lost by those reductions. They claimed, among other things, that real estate partnerships would be hard hit by the legislation, and that this would negatively impact on the creation of jobs in an industry that had suffered during the ongoing economic downturn. Rep. Brady (R-TX) claimed: “That type of thing is the reason that this new Congress and this (Obama)White House has failed to get the American economy going.” He added that real estate partnerships “are our local companies that build our office buildings, apartments, shopping centers . . . There are no abuses in this. These are the people who create jobs at home.”
Rep. Camp (R-MI), another opponent of the legislation, said “we should be encouraging business investment, not discouraging it through higher taxes . . . If loopholes exist in law that allow tax cheats to illegally hide assets . . . obviously Republicans stand ready to help close those loopholes in an appropriate way . . . .”but he claimed that the changes made in this legislation were ultimately damaging because they change “how business income has been taxed for decades, making it so that income that is currently taxed at a rate of 15 percent would be taxed at 35 percent, more than doubling that tax in an economic recession. It places one of the highest taxes on investment found anywhere (in return) . . . for 1 year of tax relief.”
The legislation passed by a vote of 241-181. Two hundred and thirty-nine Democrats and two Republicans voted “aye”. One hundred and seventy-one Republicans and ten Democrat voted “nay”. As a result, the House passed and sent on to the Senate legislation extending the tuition tax deduction, the R&D tax credit and several other tax reductions through the 2010 fiscal year.