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Senate OKs $136B Business Tax Bill

The Senate passed a far-reaching corporate tax bill Monday that provides tax breaks totaling about $136 billion for businesses ranging from film companies to bow-and-arrow makers.

The measure also closes loopholes and brings U.S. exporters in line with international trade rules.

The legislation, which was two years in the making, passed on 69-37 vote and required a rare weekend session in the Senate to complete. It now goes to the White House for President Bush's signature.

"About 200,000 American manufacturers will receive a benefit to help create jobs," said Sen. Max Baucus, D-Mont.

Senators also passed by voice vote two spending bills for 2005, a $33 billion homeland security bill and another including $14.5 billion in relief for Florida hurricane victims and drought-ravaged farmers in the Plains states, before their belated departure for the campaign trail.

The House adjourned on Saturday after finishing its actions on the three bills.

Monday's vote was made possible by a Sunday night agreement to satisfy the concerns of several Democrats threatening to immobilize the Senate with a weeklong filibuster.

Sens. Mary Landrieu, D-La., and Edward Kennedy, D-Mass., sought to protect measures left out of the corporate tax bill, while Sen. Tom Harkin, D-Iowa, objected to a cut in spending for a farm conservation program linked to drought assistance.

As CBS' Howard Arenstein reports, Landrieu had threatened a filibuster. She was fighting for tax breaks for employers of national guard and reservists, Arenstein reports.

In the settlement, the three senators were promised mostly symbolic votes in which the Senate will reaffirm positions it has taken in the past, but which have been opposed by House Republican leaders.

Senate Finance Committee Chairman Charles Grassley, R-Iowa, blamed politics for the difficulties in getting the bill through Congress. "Certain members of this body don't want a Republican president signing a jobs bill a few days before the election," he said.

Arenstein reports Grassley said the bill is not a giveaway to big business.

"We pay for it by raising revenue from business, by closing corporate tax loopholes," he said.

Harkin held up action on the hurricane aid, attached to a $10 billion military construction spending bill, to protest the decision to pay for the $2.9 billion in drought relief by cutting a farm conservation program that he has championed.

The hurricane money, intended mostly for the election battleground state of Florida, is not budgeted and will increase the federal deficit.

Landrieu won agreement for a vote on a measure giving a 50 percent tax credit to employers who compensate workers up to $30,000 in lost pay when military Reservists or National Guard members are called to active duty. It was estimated to have a $2.5 billion cost over 10 years.

Her proposal had been in the Senate version of the corporate tax bill but was taken out when House Republicans opposed it. Given that opposition, it was unlikely to win House passage.

Harkin got a vote Monday on a Senate resolution to instruct members of an upcoming budget conference committee that the Senate wants funding restored for the agriculture conservation program.

The corporate tax bill grew out of the need for Congress to respond to a World Trade Organization ruling that a $5 billion annual subsidy for U.S. exporters was illegal. As a result, 1,600 American exports to Europe are being hit by penalty tariffs that now stand at 12 percent and are rising by one percentage point a month.

The bill became the vehicle for the most significant overhaul of corporate tax law in nearly two decades. It includes $76.5 billion in new tax relief for the manufacturing sector, which was broadly defined to include oil and gas producers, architectural and engineering firms and film and music companies.

The package also provides benefits for a wide range of groups, from native Alaskan whalers, importers of Chinese ceiling fans, NASCAR race track owners and residents of states without state income taxes, who would be able to deduct state and local sales taxes from their federal tax returns.

The measure includes a $10.1 billion buyout for tobacco farmers. Several senators from both parties objected strenuously that the final version of the bill drops Senate-approved language that would give the Food and Drug Administration the power to regulate tobacco.

The Senate late Sunday approved two measures pushed by Kennedy and Harkin to reassert FDA authority over tobacco and to ban implementation of new Bush administration rules that critics say will deny overtime pay to millions of workers. Both proposals are unlikely to win approval in the House.

In addition to the tax relief for manufacturing, the tax measure has $42.6 billion in tax relief for multinational companies. All the tax breaks are paid for by $136 billion in measures intended to close corporate loopholes and tax shelters.

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