Back in February, Sen. Jon Kyl (R-AZ) threatened to derail an extension of soon-to-expire unemployment benefits if he didn’t receive assurances that the Senate would act on his proposed cut in the estate tax, which would spend hundreds of billions of dollars to reduce tax bills for the richest 0.2 percent of estates in the country. Kyl eventually backed down, but he is at it again, this time with a new target: small business lending.
Yesterday, President Obama called on Congress to pass a $30 billion plan (funded by bailout money that big banks have repaid) that would facilitate lending from community banks to small businesses and also provide them with some tax breaks. Under the plan, “the banks would benefit from a lower interest rate on that capital — as low as 1 percent — if they increase their small business lending by 10 percent over 2009 levels.” Kyl, however, is standing in the way due to his insistence on cutting taxes for multimillionaires:
There was still a chance the Senate Finance Committee would take up an on-again, off-again small-business tax incentive bill in committee this week. Those negotiations have been stymied by Senate Minority Whip Kyl’s insistence on moving an estate tax bill soon, before it gets perilously close to next year’s 55 percent rate and $1 million exemption. He has threatened to offer an estate tax amendment to the small-business bill in committee, while Baucus is working to avert that outcome, which he argues could doom the small-business measure’s chances for bipartisan support.
As a reminder, Kyl wants to institute an estate tax of 35 percent with a $5 million exemption. The estate tax has currently expired, but is scheduled to come back next year at a 55 percent rate with a $1 million exemption, and the House has already approved permanently reinstating the tax at the 2009 level of 45 percent with a $3.5 million exemption. Let’s not forget that it was Kyl who personally scuttled a plan to simply reinstate the estate tax at the 2009 level for this year, which would have given lawmakers more time to come up with a permanent solution.
Kyl’s cut costs more than $300 billion relative to the current budget baseline, and $60 to $80 billion more than permanently extending 2009 law. And Kyl — along with his co-sponsor, Sen. Blanche Lincoln (D-AR) — are looking for spending offsets for that $80 billion, raising the prospect that Congress may actually raise money elsewhere to pay for a tax cut for the very wealthiest estates in the country. The Center on Budget and Policy Priorities has called the Lincoln-Kyl plan “deeply flawed” and “unaffordable.”
Republicans spend lots of time professing their love for small businesses — and falsely claiming that progressive policies will adversely cripple such businesses — but when push comes to shove, Kyl is making it clear where his priorities lie: with the ultra-wealthy.