Domestic Taxes

Sen. Orrin Hatch (R-Utah) on Wednesday criticized Senate Majority Harry Reid (D-Nev.) for not passing the so-called tax extenders bill back in March when the legislation first had bipartisan support.

"The majority had ample opportunity before now to take up and pass the tax extenders bill but political games got in the way," Hatch said on the Senate floor. 

An amendment by Sen. John Cornyn (R-Texas) to increase the transparency on foreign holders of U.S. debt avoided being tabled Wednesday by a 38-61 vote. 

Cornyn looks to add his provision to the so-called tax extenders bill, which resuscitates several expired tax breaks and spending initiatives.

By a vote of 58-41, senators agreed to an amendment by Finance Chairman Max Baucus (D-Mont.) that requires fuller disclosure of foreign governments that hold U.S. debt. 

The amendment was added to legislation extending several tax and spending measures. 

The impetus behind the proposal is to better assess any potential risk with countries holding U.S. debt. 

The Treasury Department would submit its threat assessment on the potential risks to Congress no later than March 31 of each year. 

By this same date, the Comptroller General would also be required to submit its assessment on how the federal debt might affect the United States.

An amendment by Sens. Claire McCaskill (D-Mo.) and Jeff Sessions (R-Ala.) to curb the spending growth in Congress over a three-year period failed by a 57-41 vote. 

The senators on Wednesday sought to add their provision to the so-called tax extenders bill, which resuscitates several expired tax breaks and spending initiatives.   

The Senate on Wednesday voted 55-44 to table an amendment by Sen. Pat Roberts (R-Kan.) that would have exempted medical devices manufacturers that service pediatric physicians from the excise tax contained in the new healthcare law. 

Roberts sought to add the provision to the so-called tax extenders bill, which resuscitates several expired tax breaks and spending initiatives. 

Under the new health law, medical device manufacturers pay a 2.9 percent excise tax on the sale of their goods. 

Senators on Wednesday voted 57-42 against waiving a budget point of order for an amendment by Sen. Ben Cardin (D-Md.) that would have allowed federal workers to keep their children on their insurance plans until they are 26 years old. 

Cardin sought to add the provision to the so-called tax extenders bill, which resuscitates several expired tax breaks and spending initiatives.  

Under the new healthcare law, this option becomes available in 2011. Cardin's provision would made it immediately available. 

House Ways and Means Chairman Sandy Levin (D-Mich.) on Wednesday told reporters that he does not agree with every Senate change to the so-called tax extenders bill. 

His primary objection is with the Senate bill exempting the gain on the sale of energy partnerships from being taxed at ordinary income rates. 

"There is one provision that they inserted involving the oil and gas in carried interest I don't like," he said. "And I have expressed that to the Senate." 

The Congressional Black Caucus has cautioned Sen. Robert Menendez (D-N.J.) against moving legislation that would cap Caribbean rum tax subsidies used by Puerto Rico and the U.S. Virgin Islands to help fund infrastructure projects.  

"We note with alarm that a bill that you have introduced has the potential to cause irreparable harm to the economy and the people of the U.S. Virgin Islands," the CBC wrote to Menendez on May 11.

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  Cross-posted from Blog Briefing Room. 

Private equity investment would decrease by several billion a year while causing a loss of jobs under a pending carried interest proposal, according to a new study. 

Increasing the tax rate on profits earned by investment fund managers would reduce private equity investment by $7 billion a year, from $34 billion to $27 billion annually, according to a study by the Private Equity Council tracking the connection between tax rates and private equity investment. 

"This data is consistent over two decades and confirms that tax increases reduce private equity investment activity and that the proposed 157 percent tax increase on investment partnerships would have a harmful effect on the economy, the recovery and job creation," PEC President Douglas Lowenstein said in a release Tuesday. "We have said throughout this debate that private equity will continue, but this will have an adverse economic impact."

Senate Finance Chairman Max Baucus (D-Mont.) made some changes Tuesday to the carried interest provisions that would tax as regular income 65 percent of the carried interest paid as compensation to those in private equity investments after 2012. The House version taxes 75 percent as regular income, with a rate as high as 39.6 percent. 

Right now, all carried interest is taxed at 15 percent, the capital gains rate. That rate will increase to 20 percent when the Bush tax cuts expire at the end of this year.