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Hollywood, Rum, and Tax Cuts for the Rich

December 10, 2010 - by Donny Shaw

Late Thursday, Senate Majority Leader Harry Reid [D, NV] unveiled the final version of the Obama tax cut deal and scheduled a vote for Monday morning to start the debate. The bill contains all of the big items I outlined earlier this week — a two-year extension of all Bush tax cuts, one-year extension of unemployment insurance, a payroll tax holiday, etc. — but it also contains dozens of smaller tax items designed to sweeten the deal and secure support of wavering Democrats. Many of the new tax additions are in the area of renewable energy, which David Dayen point outs is what the Bush Administration put in the TARP bill to get it through the Senate.

Procedurally, the Senate plan is to take up the bill that the House passed last week to permanently extend middle class tax cuts and let the tax cuts for income above $250,000 expire (H.R.4853) and swap the text out for the new, 74-page Reid-Obama plan. If the Senate version passes, the bill name would change from the “Middle Class Tax Relief Act” to the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act.” The full bill text can be read here. A 13-page summary is here. And for news and blog coverage, check H.R.4853.

According to the summary, the bill contains several of the porky, targeted tax credits we’ve seen kicking around in the TARP bill, the Stimulus Act, and the attempted 2010 tax extenders legislation. Below are a few of the provisions listed in the summary:

Extension of temporary increase in limit on cover over of rum excise tax revenues to Puerto Rico and the Virgin Islands. The bill extends for two years (through 2011) the provision providing for payment of $13.25 per gallon to cover over a $13.50 per proof gallon excise tax on distilled spirits produced in or imported into the United States.

Extension of special expensing rules for U.S. film and television productions. The bill extends for two years (through 2011) the provision that allows film and television producers to expense the first $15 million of production costs incurred in the United States ($20 million if the costs are incurred in economically depressed areas in the United States).

Election to expense advanced mine safety equipment. The bill extends for two years (through 2010) the provision that provides businesses with 50 percent bonus depreciation for certain qualified underground mine safety equipment.

Extension of tax incentives for the New York Liberty Zone. The bill extends for two years (through 2011) the time for issuing New York Liberty Zone bonds effective for bonds issued after December 31, 2009.

Extension of increased rehabilitation credit for historic structures in the Gulf Opportunity Zone. The bill extends for two years (through 2011) the increased rehabilitation credit for qualified expenditures in the Gulf Opportunity Zone. The Gulf Opportunity Zone Act of 2005 increased the rehabilitation credit from 10 percent to 13 percent of qualified expenditures for any qualified rehabilitated building other than a certified historic structure, and from 20 percent to 26 percent of qualified expenditures for any certified historic structure.

Special rule for marginal wells. The bill extends through 2011 the suspension on the taxable income limit for purposes of depleting a marginal oil or gas well.

Ethanol. The bill extends through 2011 the per-gallon tax credits and outlay payments for ethanol. The bill also extends through 2011 the existing 14.27 cents per liter (54 cents per gallon) tariff on imported ethanol and the related 5.99 cents per liter (22.67 cents per gallon) tariff on ethyl tertiary-butyl ether (ETBE).

…you get the picture. It’s tempting to speculate about who these provisions are for. Gulf of Mexico provisions for Sen. Mary Landrieu [D, LA]. New York Liberty Zone for Sen. Kirsten Gillibrand [D, NY]. Film production credit for Sen. Dianne Feinstein [D, CA]. Ethanol subsidy for midwestern senators. Marginal well credit for senators in the South. The Hill has some good info on the environmental provisions in the bill and whose votes those are targeting (Sen. Tom Harkin [D, IA], Sen. Sherrod Brown [D, OH]…)

According to the Wall Street Journal, the bill will add $858 billion to the federal deficit over the next ten years.

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Comments

jagjr1999 12/10/2010 6:39am

Unbelievable the politicians do not listen to the constituents. They know people are without jobs and now depend on unemployment insurance. So in order to pass a bill, they add all this pork. Because they know so many people will approve anything as long as they will say, yes we will pay for unemployment. (Scare tactics) Pass a Bill extending unemployment, and extending the middle class tax breaks, let the others expire. Stop adding pork that we can’t afford and make decisions to stimulate the economy. It’s like watching reruns, the same ole story line with the politicians, dumbing down the public like don’t see their scheme. Fill their pockets and hope they get re-elected.

Iamamerican33 12/10/2010 8:27am

I am a 99er. My unemployment ran out the first week in November, around the same time I finished a 14mth BST class. I am 51 years old and have worked since I was 11. Yes, 11! I am still unemployed. Last night, Rachel Maddow mentioned the 99ers. Wow! THANK YOU RACHEL! It’s the first I have heard of us in a long time. I felt like we were invisible. I really did. We are like the elephant in the room that everyone has been walking around us. Are people not thinking that even those, whose benefits were halted, get reinstated, will continue to have that last tier drop off every week? And this will contine right though 2011, while the economy is still volatile? Any extended UI that is received gets spent immediately! It helps us buy food, medicine, pay our rent and survive one more day. All of this, while circulating every penny throughout businesses that NEED US as customers, in turn, STIMULATING the economy. We want to work but until jobs come available, we ask that you not forget us.

craines 12/10/2010 7:16am

Harry Reid know the 99ers should be included in this bill.
We need the 99ers included in this bill.

CR

QuiVeritas 12/10/2010 11:40am

Pork should be outlawed! It seems that it rarely, if ever, anymore, about what is truly best for the country and her citizens. I believe it stands to reason, that in order to pump more money into our floundering economy, we need to be allowed to keep more of it to so enable us. There must be taxes, but it has been ridiculous for too long. We are paying for a bureaucracy that was never constitutionally intended to exist in its present state.
There was once a protest in our history. It was based on the premise that it was immoral and unethical to tax people, without due representation.
“No taxation without representation” We fought the King of Britain over this very issue.
Anyone else out there beginning to get the sense that we are no longer truly represented?

Bunnie1978 12/10/2010 11:38am

CEO’s of companies that are rich because they made business decisions that included taking advantage of consumers, sending jobs overseas, and hiking prices unrealistically should not be getting TAX CUTS!!!! What’s 5% to a billionare??? While down the street, the person that used to work for them, who was replaced by someone overseas is now homeless, and hopeless because they spent years working in a specific job that can’t be replaced!
The attitude of entitlement in America is astounding! Rich people should remember, they only have been successful because the Law and the American Economy was conducive to that gain. It’s not anymore. I don’t believe in equality for all Americans – I don’t think that makes sense, but at the same time, we can’t allow the few very rich to hoard resources while children are homeless!

jagjr1999 12/10/2010 9:35am

In order for the unemployed, to receive life sustaining benefits. Which will add another $56 billion to the federal budget, the profit making companies need to receive another $858 billion in tax breaks?
So anyone have any guesses as to how much pork will be added to this bill before it is said and done? It amazes me that it is legal for our politicians to be doing this.
It seems like just yesterday they mention the word trillion, when talking about government debt, now they throw a trillion dollars at everything. It must be easy to do when all they have to do is add it to someone else’s account. (the tax payer) When they know they have no money in the first place, cause the exported their jobs. Is this treason?

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