Senate ready to vote on tax break extension

The U.S. Senate will vote today on a bill to extend both the Bush-era tax cuts and unemployment insurance.

Senate Majority Leader Harry Reid, D-NV, introduced the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 in the Senate Thursday night, using a procedure that disallows amendments, and he slated a vote for 3 p.m. today.

This bill is not perfect, but it provides the economic boost middle-class families and small businesses in Nevada and across America need, Reid said.

The legislation, for the most part, mirrors the deal President Obama struck earlier this week with Republican leadership for extending the Bush-era tax cuts for all citizens and unemployment insurance for millions of out-of-work Americans.

The $900 billion bill extends the era tax cuts for all income brackets for two years and sets the estate tax at 35 percent with a $5 million exemption.

The Democrats had originally planned to extend the tax breaks only for people making under $250,000 a year. But Senate Republicans threatened to use their filibuster power to block all legislation Democrats may attempt in this lame duck session, unless the tax break was extended for America's wealthiest citizens as well.

The bill provides a 13-month extension of unemployment insurance benefits wanted by Democrats, and an extension of the ethanol tax credit, which is supported by both sides.

The measure also includes extensions of the American Opportunity Tax Credit for college tuition, the Child Tax Credit and the Earned Income Tax Credit, and a $120 billion payroll tax reduction for workers.

Republicans are expected to support the bill. There has been dissension in Democratic ranks, with several Senators expressing displeasure with extending the tax cut for the nation's wealthiest.

But Democratic leaders, from the President on down, have been saying that this is the best bill possible under the circumstances to move the President's agenda past Republican obstruction and ensure middle America does not face a tax hike and millions of out-of-work Americans can get the UI benefits they desperately need.

Everybody understands what it would mean for the economy if we don't get this done, Presidential adviser David Axelrod said on Sunday.

The situation is less certain in the House of Representatives, where the Democratic majority rejected the version of the compromise introduced there last Thursday.

House Democratic leadership is saying that some form of the bill will pass, but House members want to debate its provisions. Some Democrats are particularly upset with a provision of the compromise that permits a break on the estate tax.