By Bernie Becker - 12/06/11 06:56 PM EST
At their Tuesday news conference, Collins said she didn’t want to leave the impression that congressional leaders from either party had given the measure their blessing. But the Maine Republican also said the bill could serve as a viable vehicle should the year-end gridlock continue.
The two senators’ measure would be paid for with a surtax on individual income over $1 million, a proposal that practically all Senate Republicans voted against last week, when the chamber considered an expanded payroll tax proposal from Democrats.
The proposal would also repeal tax breaks for the five largest oil companies, which also has proven to be a contentious issue this year.
Collins was the only Senate Republican to back that Democratic plan, with her GOP colleagues expressing concern that the surtax would hurt small businesses – many of whom pay taxes under the individual code.
To try and assuage those worries, Collins and McCaskill included a carveout for active small business operators in their proposal.
The senators said their plan would exempt roughly 13 percent of taxpayers with annual income north of $1 million, and around 70 percent of small business income. Under the proposal, passive investors in small businesses would not be carved out.
McCaskill and Collins said they hoped the carveout would persuade more Republicans to jump on board with their proposal.
But under the proposal, the surtax would be in place for at least a decade, the window for scoring budget plans. Senate Minority Leader Mitch McConnell (R-Ky.) and other Republicans have criticized that sort of proposal, saying a long-term tax hike should not pay for short-term relief.
The senators’ bill would also drop the payroll tax rate for employers to 4.2 percent on the first $10 million in payroll, the same rate currently paid by workers, and would extend expiring tax provisions like the credit for research and development.
It would also provide billions of dollars to both help create state infrastructure banks and for federal highway funding. On the regulation side, the measure would provide relief from the so-called “Boiler MACT” rules, a priority for many Republicans.
The bill does not include an extension of unemployment insurance or a Medicare doc fix, two other hot-button issues facing expiration.