Hollywood, Rum, and Tax Cuts for the RichDecember 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.