Both sides in Congress may have to compromise to get a tax plan through the House before the end of the year, but critics on both sides are not compromising at all.
Mitt Romney, the former Republican presidential candidate, wrote an op-ed in USA Today: "While the tax deal will succeed in temporarily putting more money in the hands of consumers, it will fail to deliver its full potential for creating lasting growth."
Meanwhile, from the other side came the Service Employees International Union, which blasted the Republican party, saying the plan's tax cuts for the affluent are too steep.
"CEOs and the wealthiest Americans get rewarded with millions more in tax breaks to pad their already hefty profits and bonuses while the American people get fewer jobs and increased hardship," said union president Mary Kay Henry in a statement. They've come after our jobs, our healthcare, and our retirement. What next?"
Ryan Ellis, tax policy director with the conservative group Americans for Tax Reform, said that he was supportive of the tax plan, though he and many Republicans had hoped the tax cuts would be permanent instead of simply a two-year extension.
"We are happy that it doesn't appear anyone's taxes will be going up next year," said Ellis. The "worst" part of the tax package, according to Ellis, is the extension of unemployment insurance, which he believes should be offset with spending cuts elsewhere.
The Senate voted 83-15 on Monday to extend the Bush-era tax cuts and special provisions for everything from tax credits for Hollywood producers to breaks for rum production in Puerto Rico and the Virgin Islands.
There are 60 or so such benefits, or business "extenders" in the bill to assist specific industries. They added substantially to the estimated $858 billion cost of the bill over the next two years.
"These extenders come up every year or so in Washington, just when you think they're going to expire," said Mark Robyn, staff economist with the Tax Foundation. He said the extender provisions are meant to stimulate the economy and investment but there are ongoing debates about whether they work.
More than two dozen amendments to the Senate bill have been filed addressing breaks for even more sectors -- it's unclear if or when these will come to a vote. The House has yet to get its collective hands on a bill.
Here are some of the special-interest provisions in the Senate bill:
"Special expensing rules for certain film and television productions" allow studios to deduct up to $15 million of movie production property costs if at least 75 percent of the total compensation for production is in the country. If a significant amount of production expenses take place in low-income or distressed communities, studios can deduct up to $20 million.
Rumming it Up
Puerto Rico and the Virgin Islands will receive the increase of rum excise tax revenues from $10.50 to $13.24 per proof of gallon. It is a temporary excise tax imposed on distilled spirits produced or imported into the U.S., but does not apply to distilled spirits exported from the U.S.
Gentlemen, Start Your Tax Engines
The bill calls for a special accounting provision for motorsports entertainment complexes like NASCAR to have a 7-year "cost recovery period" instead of standard depreciation.
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