Senate Finance Committee chairman Max Baucus (D., Mont.) and ranking Republican Chuck Grassley (R., Iowa) today unveiled a jobs bill that included tax incentives for small businesses and other groups.
As Politico notes, the bill is being aggressively marketed as a bipartisan effort, in an attempt to secure more than token Republican support. The release announcing the bill uses the word “bipartisan” seven times.
“Any efforts to needlessly delay Senate completion of consideration of this package through partisan means will undermine our goal of timely action in the current economic climate,” the senators wrote.
The bill includes a payroll tax exemption for new workers hired by small businesses this year alongside $30 billion for extensions of a range of other tax credits. But it also contains additional unemployment and COBRA benefit extensions, along with federal highway money and subsidies for private pensions.
The bill also reauthorizes non-related and politically controversial programs such as the Medicare “Doc Fix” and the Patriot Act.
UPDATE: At the Media blog, Greg notes an AP story pointing out that, in an economy that has lost 8.4 million jobs, the payroll tax haven will only generate aboute 80,000 to 180,000 new jobs over the course of a year, at a cost to eight to 18 full-time jobs per $1 million in tax breaks.
UPDATE II: Ryan Ellis at Americans for Tax Reform points out some hidden tax hikes in the bill:
- Codification of the “economic substance doctrine” which empowers the IRS to disallow a legal tax deduction or other mechanism if the IRS deems the transaction to lack “economic substance.” In other words, even if something is allowed under tax law, it will be disallowed if the IRS doesn’t think it “smells right.” This gives way too much power to the IRS to decide what passes their smell test
All told, this is likely to be a net tax cut (the JCT and CBO scoring won’t be out until next week, in all liklihood).
However, this latest tax bill continues a troubling trend: “paying for” present-law tax relief (for one more year) by permanently-enacting new tax hikes. If that trend continues, there will be a new series of tax hikes every year just to “pay for” what we already have in the way of tax relief.