Vote likely today on bill with corporate-tax breaks

By Jonathan Weisman
The Washington Post

Sen. Mary Landrieu slowed the bill down.

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WASHINGTON — A corporate-tax bill that would dole out nearly $140 billion in business breaks over the next decade was scheduled for a Senate vote today after an unexpected delay yesterday over its failure to include a tax credit for employers who keep active-duty National Guard troops and reservists on their payrolls.

The most comprehensive corporate-tax legislation in 20 years appears to have the votes to pass easily, as it has already done in the House. But Sen. Mary Landrieu, D-La., halted progress during an unusual Sunday session, demanding a vote on her 10-year, $2.5 billion Guard and reserve provision.

A compromise was reached last night, making a vote likely today. Senators also will vote on pending bills covering military construction and homeland security.

Landrieu's action infuriated some colleagues — especially Republican leaders — who had hoped to return home for the political campaign.

The legislation culminates more than two years of efforts to repeal a $5 billion-a-year export subsidy that the World Trade Organization ruled illegal. The European Union imposed punitive tariffs on a variety of U.S. products in response to the WTO ruling, and manufacturers lobbied Congress to replace the export subsidy with equivalent tax breaks acceptable under international trading rules.

But that modest aim grew into a 633-page bill with 276 provisions that benefit restaurant owners and Hollywood producers; makers of bows and arrows; NASCAR track owners; native Alaskan whalers; and importers of Chinese ceiling fans.

The central provision, worth about $76.5 billion over the next decade, would lower the tax rate on corporate profits from 35 percent to 32 percent for all domestic producers — a broadly defined term that includes such activities as manufacturing, architectural design and filmmaking.

Those cuts are offset over the first 10 years by tax-loophole closures and other revenue raisers.

Supporters say the bill will spur job creation, simplify the Byzantine tax code governing overseas profits and provide needed tax relief to the beleaguered manufacturing sector. They emphasized the bill's provisions clamping down on egregious tax shelters and the urgent need to lift the rising EU sanctions.
 
"It's very clear the pluses outweigh the minuses," said Sen. Max Baucus, D-Mont.

But the bill has elicited condemnation from budget watchdogs, liberal interest groups, some lawmakers and Treasury Secretary John Snow, all of whom see it as a special-interest giveaway that will exacerbate the budget deficit.

Sen. Edward Kennedy, D-Mass., dismissed it as "a lobbyist's dream and a middle-class nightmare." Sen. John McCain, R-Ariz., called it "the worst example of the influence of special interests that I've ever seen."

Public-health groups have protested that the bill includes a $10 billion buyout for tobacco farmers but does not link it to regulation of tobacco products by the Food and Drug Administration.

But even before Landrieu's delay, passage seemed unstoppable, in large part, McCain said, "because there's something in it for everyone." The Senate voted 66-14 yesterday to cut off debate on the measure, leaving opponents at most 30 hours to hold off a final vote. That was before Landrieu compromised. Even the bill's sharpest Senate critics indicated they would ultimately go along.

"There are items in this bill that some of my constituents would find absolutely laughable, but I just have to tell them we have to laugh sometimes," Landrieu said.

Under congressional rules, Landrieu could not amend the corporate-tax bill with her National Guard provision because the legislation had been approved by House and Senate negotiators. Instead, she wanted to add the employer tax credit to a separate measure that expands retirement-savings opportunities for Guard troops and reservists.

Republicans objected that the Landrieu measure would favor Guard and reserve troops over active-duty forces, whose only income is their military pay.