Disappointed US Business Wants Promised Tax Cuts

by Mike Godfrey, Tax-news.com, Washington

08 June 2001

Business lobbyists say that they are disappointed with the US$1.35 trillion tax cut which became law on Wednesday, and are pushing for a second round of tax breaks when the federal minimum wage bill comes before the House this summer. Although 10 year tax cut sounds substantial, several corporate tax breaks were left out, and the majority of business groups feel that they are owed relief from the Republican president that they helped to bankroll during the 2000 campaign.

Measures which are being pushed for by lobbyists include: A reduction in the top capital gains rate from 20% to 15%, an increase in allowable deductions for investment in plant and equipment, a permanent extension of the tax credit received by employers for taking on ex-convicts and former welfare recipients, and a permanent extension of the research and development credit. Companies are asking that some or all of these measures be tacked on to the forthcoming minimum wage bill. However, it may not be that easy any more. A Democrat controlled Senate kicking their heels, corporate infighting over tax cut priorities, and a gloomy budget outlook could mean that Bush is unable to keep the promises that the business community says he made in exchange for their backing.

Newly installed Senate majority leader, Tom Daschle said this week that any new tax cuts would have to be offset by tax increases or spending cuts, but denied that the Democrats were planning to tinker with the new tax bill anytime soon. However, he acknowledged that lawmakers would have to take a look at the legislation somewhere along the line. 'You can't pass a tax bill that sunsets in 9 years and not know that you are going to have to revisit this question,' he explained.

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