Domestic Taxes

The apocalyptic prediction Wednesday by the Congressional Budget Office that the budget is on a unsustainable course have some on Capitol Hill wondering if an extension of the middle-class tax cuts enacted by President George W. Bush is fiscally prudent. 

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"Maybe if they stop stalling everything that comes to the floor we might be able to get to that stuff."

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The Senate is aiming to pass an unemployment benefits and homebuyer tax credit extensions bill sometime Wednesday. 

Senate Majority Leader Harry Reid (D-Nev.) said he wants to reach an agreement with Republicans to vote today on the Senate's most recent version of the extensions bill. 

Reid also wants to reach a unanimous consent agreement with Republicans on the House-passed tax credit bill that gives qualified homebuyers until Sept. 30 — instead of June 30 — to close on their purchases. 

If the Senate can push their bill through today, the House would have time to pass the measure before leaving town for the July 4 recess. 

The bill would provide for a $33.9 billion six-month extension of unemployment benefits, retroactive to their June 1 expiration. 

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Five states will increase cigarette taxes starting July 1 to combat budget deficits. 

Beginning next month, New York will up its tax by $1.60 to $4.35 per pack; Hawaii, up 40 cents to $3 per pack; New Mexico, up 75 cents to $1.66 per pack; South Carolina, up 50 cents to 57 cents per pack, and Utah, up $1 to $1.70 per pack.  

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The decision by Senate Majority Leader Harry Reid (D-Nev.) to move away the small business jobs bill, within hours of having voted to debate it, and replacing it with another extension for unemployment benefits has some in his chamber wondering what else they might be debating before the July 4 recess. 

"They [Democrats] have the attention span of a four-year-old," a senior aide told The Hill. "We were on the small business bill for, what, six hours before moving to this one?"

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The Senate around 2pm this afternoon voted 66-33 to advance the debate on legislation providing tax relief and loan assistance to small businesses.

Shortly after 8pm, Reid teamed up with Senate Finance Chairman Max Baucus (D-Mont.) and filed cloture on a bill providing a six-month extension for unemployment benefits and a three-month extension for closing on the purchase of a home and still qualifying for the homebuyer tax credit.

"The bill that Chairman Baucus and I introduced today would restore criticial assistance that unemployed workers depend on to help make ends meets," Reid said in prepared remarks. "In addition, we're trying to extend the closing deadline for homebuyers in Nevada and across the country who have already qualified for the first-time homebuyer tax credit and need some extra time to close on their new home and experience the American Dream of homeownership. These common-sense solutions to help millions of Americans deserve bipartisan support and should be passed swiftly."

The cost to extend unemployment is approximately $35 billion and is not offset. Most Republicans oppose extending the program if its cost is not paid for.

Reid has so far tried three times to extend unemployment insurance without paying for its cost. No Republicans have supported these proposals.

Maine Republican Senator Olympia Snowe has now signalled that she will support to extend unemployment even if it is not paid for. But Reid will need at least two more conservative senators to follow Snowe's lead if his fourth try is to be successful, assuming Sen. Ben Nelson (D-Neb.) continues to insist on the benefits be paid for before he supports their extension.

The road to pass a unemployment benefits extension took another twist on Tuesday night.

Senate Majority Leader Harry Reid (D-Nev.) filed cloture on a bill that would provide a $33.9 billion six-month extension of unemployment benefits and a three-month extension for homebuyers to take advantage of a federal tax credit. 

The Senate and House also will have to reconcile their tax offsets for the credit. 

With the Senate probably about two votes short of the 60 needed to pass an unemployment benefits extension on its own, the bipartisan homebuyer tax credit could attract the needed Republican votes. 

But it means the Senate measure would need to pass the bill and get it to the House before leaving town later this week for the July 4 recess. The House would likely have the votes to pass the Senate's combined measure. 

The House is expected to pass a stand-alone unemployment benefits extension on Wednesday. The chamber passed the homebuyer tax credit extension earlier Tuesday.

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With the deadline looming, the House passed 409-5 a bill to give homebuyers an extra three months to take advantage of a federal tax credit. 

Homebuyers who qualified for the credit would have until September 30 — instead of June 30 — to close on their purchases. The tax credit, which required buyers to sign a contract on a home by April 30, provides homebuyers with a tax write-off of as much as $8,000.

The legislation is fully offset. 

The bill has bipartisan support in the Senate and is likely to be cleared before Congress leaves for the July 4 recess. 

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The effort by House Ways and Means members to create a green-energy tax bill costing approximately $17 billion is already hitting head winds in the Senate because the legislation's cost is offset by repealing tax breaks aimed at the oil and gas industry. 

"I think [passage] would be very doubtful," said Sen. Lisa Murkowski (R-Alaska), the ranking member on the Senate Energy and Natural Resources Committee. 

"We had a vote not too long ago just on that same issue in term of those taxes, and support clearly wasn't there," Murkowski added. 

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The Senate on Tuesday voted 66-33 to advance the debate on legislation providing tax relief and loan assistance to small businesses. 

The bill considered was a measure that recently passed the House, but it will be replaced by legislation produced by Senate Finance Chairman Max Baucus (D-Mont.) and Senate Small Business Chairwoman Mary Landrieu (D-La.). 

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Like the House bill, the Senate proposal exempts smaller C corporations from paying capital gains taxes on stock. It also extends loan opportunities from the Small Business Administration. Specifics on the bill have yet to be released. 

Senate Democratic leaders originally hoped to complete the bill before adjourning for the July 4th recess. But funeral activities for Sen. Robert Byrd (D-W.Va.) will probably postpone final action on the legislation until lawmakers return from the break. 

"With Senator Byrd's passing, I'm not sure that [passage before July 4] is going to happen," Landrieu told The Hill. 

The task of passing a bill to continue an unemployment insurance extension got a little harder Monday while more than a million people stand to lose their benefits within days. 

The early morning passing of Sen. Robert Byrd (D-W.Va.) leaves Democrats three votes short of passing a tax extenders bill that included a $33 billion six-month extension of unemployment benefits, which has stalled out in the upper chamber. 

To move a bill, Senate Democrats could need the help of at least three Republicans  to reach a 60-vote threshold to pass any type of extension unless the lawmakers can reach an agreement before leaving for the July 4 recess. 

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