Senate OKs Corporate Tax Overhaul Bill to Settle Trade Dispute
The Senate on Tuesday approved a corporate tax overhaul bill drafted to settle a costly trade dispute but expanded to address election-year concerns about high energy prices.
Tax breaks to promote energy conservation and production were included in the $170-billion measure, representing a new strategy for moving President Bush’s stalled energy legislation. The action came as the government forecast that prices at the pump nationally would reach an average of $2.03 a gallon in June. In California, gasoline prices have reached a statewide average of $2.22 a gallon.
Senate approval of the tax bill, by a 92-5 vote, represented a significant step toward repeal of an export tax break that the World Trade Organization ruled an illegal trade subsidy, prompting the European Union to impose sanctions on about 1,600 U.S. goods, from California produce to Carolina textiles. The bill repeals the export subsidy and replaces it with other tax breaks, primarily for manufacturers.
The House still must act -- but with the retaliatory tariffs increasing every month, business groups lobbying for the bill’s passage and an election approaching, Congress is expected to complete work on a bill and send it to Bush before November.
“Were just pleased as punch,” said Kimberly Pinter, director of corporate finance and tax policy for the National Assn. of Manufacturers, expressing hope that the Senate vote would provide momentum for House action.
The measure includes tax breaks for a variety of interests, including Oldsmobile dealers, shipbuilders and NASCAR tracks.
A “Christmas tree of goodies for very conceivable special interest,” said Sen. John McCain (R-Ariz.), who lost an effort to strip the energy tax breaks from the bill by an 85-13 vote.
Supporters of the bill, called the “Jumpstart Our Business Strength,” or JOBS Act, said it not only would settle a trade dispute but also would stimulate growth in the manufacturing sector.
“This legislation is going to help grow American jobs,” said Sen. Norm Coleman (R-Minn.). Sen. Peter Fitzgerald (R-Ill.) said that repealing the export subsidy without providing other tax breaks would have amounted to a tax increase on U.S. manufacturers, further discouraging a sector hard hit by job losses in recent years.
The bill includes a provision championed by Sen. Barbara Boxer (D-Calif.) designed to prevent “runaway” film production by giving studios a larger tax break if they film in the United States.
Boxer and her California Democratic colleague, Dianne Feinstein, voted for the bill.
The legislation, which had been debated for weeks, had appeared in jeopardy of falling victim to election-year gridlock. But an impasse was broken when Republicans who control the Senate, eager to pass the bill, agreed to a vote on a Democratic priority -- whether to provide federal assistance to unemployed workers who have exhausted their state benefits.
The measure to extend jobless benefits fell one short of approval Tuesday. Sen. John F. Kerry of Massachusetts, the presumptive Democratic presidential nominee, was campaigning in Kentucky and Florida. With 60 votes needed to clear a procedural hurdle, the measure failed, 59 to 40.
“We were told that, no matter what ... they were not going to let it happen,” Kerry told a Jacksonville television station Tuesday night. “They are playing a game.”
The tax bill includes a Democratic-sponsored measure, approved last week, that would block the Bush administration from carrying out rule changes that critics said would deny workers overtime pay.
