By Ledyard King • Gannett Washington Bureau • December 13, 2010
WASHINGTON - The Senate voted overwhelmingly Monday to move forward with a massive package of tax breaks that would increase the soaring national debt but includes several provisions beneficial to South Dakota.
Democrat Tim Johnson and Republican John Thune, often on opposite sides of key issues this year, joined in a bipartisan 83-15 vote to endorse the deal President Barack Obama cut with Republican leaders last week.
The motion to move ahead with the bill needed 60 votes to pass. A final Senate vote on the package is expected by Wednesday.
The bill faces hurdles in the House, where many liberal Democrats are outraged that it would extend tax breaks for the richest Americans.
The $858 billion package would extend Bush-era tax cuts for all income groups through 2012, reduce payroll taxes by 2 percent through 2011 and set the estate tax at 35 percent for everything above the first $5 million of an individual’s estate.
A South Dakota family earning $69,000 would see a benefit of about $2,400 if the plan is adopted, according to Citizens for Tax Justice, a liberal advocacy group based in Washington.
Among the package’s tax breaks is a one-year credit for employers who hire American Indians, help for wind energy, and a one-year extension of a 45-cents-per-gallon credit for ethanol blenders.
Jeff Broin, CEO of Sioux Falls-based Poet Inc., the country’s largest ethanol producer, said last week that not extending the credit could force plant closures and cost jobs.
The package also would renew unemployment benefits for 13 months, benefiting 2,215 South Dakotans who lost coverage last month, according to the White House.
Obama had wanted to preserve unemployment benefits and permanently extend tax cuts only for individuals earning less than $200,000 and couples earning less than $250,000, a threshold most Democrats in Congress backed.
But the president said he agreed to cuts with no income limits because Republicans appeared unwilling to back down and he didn’t want unemployment benefits or middle-class tax breaks to expire as the economy continues to struggle.
Johnson and Thune expressed reservations about the deal in the days leading up to the vote. Johnson opposed tax breaks for the wealthy and Thune was unhappy spending cuts weren’t found to offset the $56.5 billion cost of extending unemployment benefits. He has offered an amendment that would use unspent, unobligated discretionary government funds to offset the benefits extension.
South Dakota Democratic Rep. Stephanie Herseth Sandlin has not announced how she’ll vote on the tax-cut package, but she has endorsed a temporary extension of all tax breaks to help the economy and buy time for a more permanent solution.
Contact Ledyard King at lking@gannett.com.