Lawmakers have agreed on legislation to extend expanded jobless benefits for the long-term unemployed through the end of the year. Laid-off workers would also continue to get subsidies to buy health insurance through the COBRA program.
The bill would also extend, for a year, about 50 popular tax cuts that expired in January, House and Senate leaders announced Thursday. The bill would be paid for, in part, by tax increases on investment managers and some U.S.-based multinational companies.
Lawmakers had been negotiating a provision that would spare doctors from a scheduled 21 percent cut in Medicare payments. They agreed to delay the cuts until 2014, when they will have to address the issue again. The bill would also provide $24 billion to states to help cover Medicaid costs.
The House could vote on the bill as early as Friday, with the Senate voting next week.
Delays in extending the tax breaks have left thousands of businesses unable to plan for their tax liabilities. Delays in passing a long-term extension of emergency unemployment benefits has forced thousands of laid off workers to live month to month with no certainty of income.
Unemployment benefits for many will start to run out June 2, unless Congress acts. The bill would extend unemployment benefits for up to 99 weeks in many states, at a cost of $47 billion.
"Provisions in this legislation will help companies and state and local governments spur job growth while also providing critical tax relief and economic assistance to American families who were hit hard by the recession," said Rep. Sander Levin, D-Mich., chairman of the tax-writing House Ways and Means Committee.
Levin unveiled an outline of the bill along with Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.
The bill started as a one-year extension of popular tax breaks, but has grown into a grab bag of unfinished business lawmakers hope to complete before Memorial Day.
In response to the BP oil spill in the Gulf of Mexico, the bill would increase the 8-cent-a-barrel tax that oil companies pay to finance the Oil Spill Liability Trust Fund. President Barack Obama has proposed a 1-cent increase; lawmakers were still negotiating a final amount Thursday.
The tax breaks, which total more than $30 billion, would be retroactive to Jan. 1 but would again expire at the end of December. They include a property tax deduction for people who don't itemize, lucrative credits that help businesses finance research and develop new products, and a sales tax deduction that mainly helps people in states without income taxes.
The biggest revenue raiser would be the tax increase on investment managers. Investment managers typically get a fee to manage funds or assets. They also get a share of the profits earned for investors above a certain level.
Under current law, the profit-sharing fees, called carried interest, are taxed as capital gains, with a top rate of 15 percent. The bill would tax the fees as regular income, with a top tax rate of 35 percent, scheduled to rise to 39.6 percent in 2011.
Estimates were incomplete Thursday, but the tax was expected to raise about $20 billion over the next decade. The bill would also raise taxes on multinational companies by $14.5 billion.
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