La. Senator Stalls Corporate Tax Bill

WASHINGTON – The Senate, in an unusual Sunday session, saw its effort to pass a sweeping corporate tax bill grind to a halt in the face of delaying tactics by a Louisiana senator upset that the measure did not include pay support for members of the Reserves and National Guard.

By a 66-14 vote, lawmakers did agree to limit debate on the tax bill, which provides $136 billion in new tax breaks for businesses $10.1 billion to buy out tobacco farmers’ government quotas.

But hoped-for final passage of the measure was delayed until Monday because of objections from Sen. Mary Landrieu, D-La.

Landrieu was seeking to get approval for another bill that would give employers a tax credit if they made up the pay their employees lose when they are called to active duty in the reserves or National Guard.

Landrieu’s proposal would provide a 50 percent tax credit to employers for up to $30,000 in salary payments a year and was estimated to have a $2.5 billion cost over 10 years.

That proposal was in the Senate version of the corporate tax bill but it got stripped out of the compromise reached by a House-Senate conference committee.

In addition to the fight over active duty pay, Sen. Tom Harkin, D-Iowa, was blocking final passage of a a $14.5 billion hurricane and farm disaster package and a $33 billion bill financing the Department of Homeland Security because of his unhappiness that funding was cut for an agriculture conservation program.

Senate Majority Leader Bill Frist, R-Tenn., said he planned votes for Monday to end the filibuster effort on the disaster aid and Homeland Security bills.

Tempers grew short during the rare Sunday session. Republicans fumed about the delay that was forcing the Senate into overtime when they had hoped to adjourn on Friday to go home and campaign. The House wrapped up business on Saturday.

Sen. Rick Santorum, R-Penn., complained that “what is going on in the United States Senate is political demagoguery at the highest levels.”

But Landrieu said her campaign was having an impact. She released a batch of e-mails her office had received in support of her delaying tactics. One e-mail said, “Please continue your fight for our soldiers.”

The tax package offers $136 billion in tax breaks to beleaguered U.S. manufacturers and an array of other interests.

Both sides predicted lopsided approval of the bill in the Senate, which will send the measure to President Bush for his signature. The package, the most sweeping overhaul of corporate tax law since 1986, provides a wide range of tax benefits for native Alaskan whalers, importers of Chinese ceiling fans and NASCAR race track owners.

The centerpiece of the tax legislation is $76.5 billion in new tax relief for the battered manufacturing sector, which has lost 2.7 million jobs over the past four years. But manufacturing is broadly defined to include not just factories but also oil and gas producers, engineering, construction and architectural firms and large farming operations.

The bill was seen as must-pass legislation because it repeals a $5 billion annual subsidy for U.S. exporters that has been ruled illegal by the World Trade Organization. Because of that ruling, 1,600 American exports to Europe have been hit by penalty tariffs that now stand at 12 percent and are rising by 1 percentage point a month.

Some senators were also upset that the final version of the corporate bill dropped a provision that had been in the Senate version of the bill that would have given the Food and Drug Administration the power to regulate tobacco, a change they saw as critical in the campaign to stop children from getting hooked on cigarettes. The bill does provide a $10.1 billion buyout for tobacco farmers.

“This bill is of the elite corporate interests, by the elite corporate interests, for the elite corporate interests,” said Sen. Edward Kennedy, D-Mass. “It’s a lobbyist’s dream and a middle-class nightmare.”

In addition to the $76.5 billion in tax relief for manufacturing, the measure would also provide $42.6 billion in tax relief to multinational companies.

Supporters argued that the tax relief for multinational corporations would boost the competitiveness of U.S. companies, but opponents argued that it would simply provide more tax benefits to support the movement of U.S. jobs overseas.

To pay for the $136 billion total of new tax relief over the next decade, the legislation would rely on the savings from repealing the export subsidy and would close corporate loopholes and tax shelters – thereby raising an estimated $82 billion over the next decade.