The House of Representatives approved the Tax Extenders Act of 2009 on Wednesday by a vote of 241 to 181. As you can see from the roll call, all but ten Democrats voted for the bill, including Iowa’s Bruce Braley, Dave Loebsack and Leonard Boswell. All but two Republicans voted against it, including Iowa’s Tom Latham and Steve King. After the jump I’ve posted more details about the business tax credits that would be extended if this bill becomes law.
On December 3, the House passed the Permanent Estate Tax Relief for Families Farmers and Small Businesses Act, which caps the estate tax at 45 percent and exempts estates worth up to $3.5 million (preserving this tax at 2009 levels). Again, all of Iowa’s Democrats voted for the bill. Iowa’s Republicans voted against it. If Congress had not acted, the estate tax would have been repealed in 2010 and then would have reverted to its 2001 level in 2011 (a 55 percent tax on estates valued above $1 million).
Republicans claim the so-called “death tax” is a burden to small business owners and farmers. Candidate Jim Gibbons already used this canard in a press release targeting Boswell. Right-wingers can’t find any real-world families who had to sell the farm because of the estate tax. The Center on Budget and Policy Priorities has concluded (emphasis added),
If the 2009 estate tax rules are extended, only 100 small business and farm estates in the entire nation will owe any estate tax at all in 2011, according to the new estimates by the Tax Policy Center, and virtually none of those businesses and farms would have to be sold to pay the tax. […]
Under 2009 law, the estates of more than 997 of every 1,000 people who die will owe no estate tax whatsoever. […] In its latest analysis, the Tax Policy Center projects that only 0.25 percent of the estates of people who die in 2011 – i.e., the estates of 1 of every 400 people who die – will be subject to the estate tax if the 2009 estate tax rules are continued.
Less than 1 percent of estates in Iowa were subject to the estate tax in recent years.
To sum up: Republicans are for saving farmers and small business owners from the so-called “death tax” that doesn’t apply to them. But when they had a chance on Wednesday to extend tax credits affecting farms and small businesses, House Republicans said no.
Why am I not surprised?
Provisions in the Tax Extenders Act of 2009, approved by the U.S. House on December 9, 2009 (excerpt from a Democratic Congressional Campaign Committee press release):
The measure provides $17.8 billion in business tax relief.
The measure extends the research and experimentation (R&E) tax credit for another year, encouraging businesses to increase investments in technology and create more high-tech jobs for the twenty-first century.
It helps American businesses create jobs here at home and supports American competitiveness by extending the R&D tax credit for nearly 11,000 corporations and the special rules for active financing income.
Approximately 70% or more of the benefits of the R&D tax credit are attributable to salaries of workers performing U.S. based research and the credit stimulates American made innovation in all 50 states.
It increases to $350,000 the amount of investments that small businesses in a disaster area can expense in the year. It also raises to $1.4 million the amount of investment used to determine when the ability to use the expensing rules begins to phase out, thus allowing a greater number of businesses to qualify for the rules.
From a press release Congressman Loebsack’s office released on December 9:
· Extension of the State and Local General Taxes Deduction. The bill would extend for one year (through 2010) the election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes.
· Extension of the Deductions for College Tuition. The bill would extend for one year (through 2010) the above-the-line tax deduction for qualified education expenses.
· Extension of the Deduction for Classroom Expenses for Teachers. The bill would extend for one year (through 2010) the $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, supplies (other than non-athletic supplies for courses of instruction in health or physical education), computer equipment (including related software and service), other equipment, and supplementary materials used by the educator in the classroom.
· Extension of the Research and Development Credit for Business. The bill would extend for one year (through 2010) the research credit.
· Extension of Depreciation for Farming Business Machinery and Equipment. The bill would extend for one year (through 2010) the provision that provides a five-year recovery period for certain machinery and equipment which is used in a farming business.
· Extension of Tax Incentives for Biodiesel and Renewable Diesel. The bill would extend for one year (through 2010) the $1.00 per gallon production tax credit for biodiesel and the small agri-biodiesel producer credit of 10 cents per gallon. The bill would also extend for one year (through 2010) the $1.00 per gallon production tax credit for diesel fuel created from biomass.
· Extension of Tax Incentives for Natural Gas and Propane used as a Fuel in Transportation Vehicles. The bill would extend for one year (through 2010) the $0.50 per gallon production tax credit for natural gas and propane used as a transportation fuel.
· Extension of Employer Wage Credit for Activated Military Reservists. The bill would extend for one year (through 2010) the provision that provides eligible small business employers with a credit against the taxpayer’s income tax liability for a taxable year in an amount equal to twenty percent (20%) of the sum of differential wage payments to activated military reservists.