Domestic Taxes

Sen. Chuck Grassley (R-Iowa) on Wednesday urged Senate Majority Leader Harry Reid (D-Nev.) to act on making changes to estate tax law before it reverts back to pre-2001 levels in 2011.

The senator warned that no action would mean thousands of small business owners and farmers would be subjected to the tax.

"I hope that the Democratic leadership will soon reveal their hand so that those thousands of small businesses and farmers aren't hung out to dry," he told reporters.

Former Minnesota Rep. Jim Ramstad (R) has joined alliantgroup, a tax speciality firm that helps businesses with federal and state tax incentives, as a senior advisor. 

"I'm proud to be associated with alliantgroup and the critical service they provide not only to businesses, but to our economy and to the creation of American jobs," Ramstad said Wednesday in a statement. "Helping small and mid-sized companies grow has been a focus of my career and alliantgroup is dedicated to the same mission."

Ramstad served in Congress from 1991 to 2009 and was a member of the House Ways and Means Committee and the panel's Health subcommittee. He was ranking member of the Oversight subcommittee during his nearly 20 years in office. 

Sen. Chuck Schumer (D-N.Y.) on Wednesday introduced legislation that slaps a $0.25 excise tax on companies that transfer domestic customer service calls to foreign call centers. The bill's chief aim is to stem the outsourcing of jobs.

"If we want to put a stop to the outsourcing of American jobs, than we need to provide incentives for American companies to keep American jobs here," Schumer said in prepared remarks. "This bill will not only serve to maintain call center jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back."

Sen. Chuck Grassley (R-Iowa) criticized the Obama administration and Democratic leaders in Congress for touting the COBRA subsidy as a special tax incentive for small businesses when it actually benefits former employees who no longer receive financial aid from employers for health coverage. 

"[The] IRS is telling small business that the government subsidy provided to former employees electing COBRA health coverage is a 'special tax incentive for small business," Grassley said in prepared remarks. "This is a complete mischaracterization." 

Grassley is the ranking member on the Senate Finance Committee and argues CORBA aids former employees by subsidizing their cost for health coverage and not the company that used to employ them. 

"A small business gets no benefit," Grassley said, adding, "The administration should be honest with small business."

Manufacturing grew for the 10th straight month, outpacing forecasts in May, signaling a strengthening economy, according to a report released Tuesday. 

The Institute for Supply Management's gauge fell to 59.7 last month from 60.4 in April but still exceeded most forecasts. Readings greater than 50 reflect economic expansion. 

The demand for exports caused factories to ramp up hiring as 12 of 18 industries reported growth and the employment index rose 1.3 percentage points to 59.8 percent in May, the sixth consecutive month of growth in manufacturing employment. An employment index above 49.8 percent represents growth.

Improved manufacturing and construction numbers didn't provide enough of a boost for stocks Tuesday, as the Dow Jones industrials tumbled late in the day, finishing down 112 points, or 1.11 percent to 10,024.

Free trade agreements (FTAs) could boost U.S. exports and the nation's gross domestic product by billions, sixteen Senate Republicans argued in a letter to the White House on Tuesday. 

Led by Utah Sen. Orrin Hatch, lawmakers are pushing for completion of trade agreements with Korea, Panama and Colombia they say would "be the catalyst for significant economic growth and job creation in the United States," in the letter sent to President Barack Obama. 

A trade agreement with Korea would help the nation's economy grow by up to $11.9 billion, with exports growing from $9.7 billion to $10.9 billion in agriculture, machinery, electronics and transportation equipment, according to International Trade Commission figures cited by the lawmakers. 

Additionally, an agreement with Panama would boost GDP by $2.5 billion, the letter said. 

The group of 16 is asking the Obama administration to provide the three countries — Korea, Colombia and Panama — with a "well-defined and finite list" of outstanding issues, and provide a timeline to Congress for enactment of the free trade agreements, according to the letter.

The New Democrats on Friday urged House leaders to extend bonus depreciation through 2010 in legislation aimed at small businesses. 

"We believe that an extension of bonus depreciation, which will allow U.S. employers to expense up to 50 percent of the cost of business equipment in the first year of its purchase, will help stimulate economic growth and encourage  investment," the group wrote in a letter to Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.). 

The House has already advanced a small business package to the Senate that zeroes out capital gains taxes for smaller C corporations.

But with the passage of the so-called tax extender bill earlier today, tax-writers in both chambers are expected to re-focus on legislation that helps small businesses over the Memorial Day recess.  

Earlier this week, President Obama called on Congress to pass legislation granting small businesses greater access to capital and providing tax incentives. Bonus depreciation is usually a part of the arsenal lawmakers use when providing relief to small businesses.

"New Dems called for an extension of bonus depreciation in 2009, and it was included in the American Recovery and Reinvestment Act," the letter states. "Without an new extension for 2010, American companies will face additional burdens in retaining workers and making key capital investments." 

Senate Finance Chairman Max Baucus (D-Mont.) intends on moving a small business bill through his chamber, but the matter is complicated. Lawmakers there want some assurance that an agreement on the estate tax is within reach before moving forward on a small business bill. Last week, a possible deal on the estate tax fell through and key negotiators are not sure when another deal will be within reach.

Congress should consider eliminating the caps on damages caused oil spills as the cost nears $1 billion, Speaker Nancy Pelosi (D-Calif.) said in an interview Friday. 

"There is a movement afoot in Congress for that. Why have a cap?" Pelosi said in an interview with Bloomberg's Al Hunt, scheduled to air tonight. 

Pelosi had previously backed the idea of raising the cap from $75 million to $10 billion for economic damages. 

"You would hope that there would not be more than $10 billion of damage, but understand it is for each episode," she said.

Package includes an extension of unemployment benefits and the "doc fix."

After nearly a week of negotiations, the House passed a two-pronged tax extenders package Friday that includes an extension of unemployment benefits and fix for Medicare payments to doctors. 

The approximately $116 billion two-piece bill, includes a $39.5 billion extension of unemployment benefits through November, which isn't offset and $53 billion of tax extensions, summer jobs and the Pigford case settlement for black farmers, which is paid for with tax increases on investment fund managers. The total of the first package is around $92.5 billion. 

The second part of the bill is $23 billion for a 19-month "doc fix," a term referring to delaying a cut in Medicare reimbursements to doctors, which easily passed 245-171. 

The Senate left town for the Memorial Day recess before dealing with the measures, meaning unemployment benefits for some will lapse next week.