The Senate Democrats have developed substitute language to replace the House's language amending the Senate's language amending that earlier bill with the tax deal. They've named it the "tax relief, unemployment insurance reauthorization and job creation act of 2010". T
hat job creation part is, I expect, mostly a wish and not a likely expectation. Other than the few provisions that put money into the hands of those who really need it, the bill won't be very stimulative. Those provisions are unemployment insurance extension and the payroll holiday (to the extent it goes to people making at or below the average income). The rest is dross that goes primarily to companies and individuals who are getting along okay. It seems foolish to think expensing, the research credit, the break to big banks from the active financing exception, extending the percentage depletion allowance or tax breaks for millionaires--from rate reductions to estate tax reductions to tax-free distributions from individual retirement accounts for charitable purposes and exclusion of all gain from certain small business stock-- will create jobs.
By the way, I need to correct an earlier misstatement about the payroll holiday before the text was available. (Thanks to Ed Kleinbard for pointing this out). The proposed legislation provides in section 601(e) for transfers to the social security trust fund for the amounts that it will lose due to the payroll tax holiday. So while the payroll holiday will add to the deficit, it shouldn't provide the fodder for Social Security benefit reduction that I had predicted.
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