Inviting a showdown with the Senate, the House of Representatives on Thursday passed a richly sweetened corporate-tax overhaul that contains $140 billion in tax cuts and a nearly $10 billion buyout of tobacco farmers. The bill passed 251-178, drawing support from 48 Democrats, many from tobacco-growing states. Opponents included 23 Republicans, a mix of moderates and conservatives who objected to the bill's cost.
At its core, the bill is designed to replace an export credit that's resulted in punitive tariffs against U.S. exports by the European Union. The World Trade Organization ruled the credit was illegal, forcing Congress to repeal it to avoid higher duties on American-made products. To win support from wary lawmakers, the bill's authors loaded it with handouts to special interests, ranging from the help for tobacco farmers to tax breaks for makers of arrows, liquor, even ceiling fans. The House bill would end the tax credit the WTO objected to and replace it with $140 billion in various tax reductions. The bill would reduce the top corporate tax rate from 35 percent to 32 percent. The bill's net effect would be to increase the federal budget deficit by $34 billion over 10 years.
Among the special-interest tax breaks: Hunting and fishing: The bill would reduce an excise tax on U.S.-made arrows from 12.4 percent to 11 percent. The change has been pushed by Rep. Paul Ryan, R-Wis., an avid bow hunter. It also would repeal an excise tax on fish-finding sonar devices and tackle boxes. The biggest tackle-box maker is in House Speaker Dennis Hastert's district in Illinois. Cost to Treasury: $48 million over 10 years.
Aircraft: The bill would enhance the depreciation of small jets and planes. The provision would help manufacturers of small aircraft, more than half of which are built in Kansas. Cost to Treasury: $247 million over five years.
Fans: The bill would temporarily eliminate a customs duty on foreign-made ceiling fans. The budget watchdog group Taxpayers for Common Sense says Home Depot is a major beneficiary. Cost to Treasury: $28 million over three years.
Among other carrots designed to attract Democrats is a $3.6 billion provision that would allow taxpayers to deduct either state sales taxes or state income taxes from their federal income taxes. Currently, only state income taxes are deductible. The provision would benefit taxpayers in such states as Florida, Texas and Nevada, which don't collect income taxes. It would expire after two years. While tax bills are often vehicles for special-interest provisions that help win votes for passage, the number of additions to this bill drew special scorn. Rep. Steny Hoyer of Maryland, the second-ranking Democrat in the House, called it "an orgy of self-indulgence. "Duluth News-Tribune:
