| Once again Jim Himes has voted with Republicans, and against Democrats, on a tax measure. This time he was one of only 10 Democrats, and the only Democrat from Connecticut, to vote against the Tax Extenders Act of 2009 which 239 Democrats and 2 Republicans supported.
Why did Himes vote against it? Perhaps because his investment banker and venture capital pals will no longer receive special breaks which taxed much of their income at much lower capital gain rates.
Meanwhile, the bill does an awful lot of good things:
The Tax Extenders Act of 2009 would provide individuals and businesses with approximately $30 billion in tax relief in 2009 by extending for one year (through 2010) more than forty provisions that are scheduled to expire at the end of 2009. This $30 billion in tax relief includes more than $5 billion in individual tax relief and more than $17 billion in business tax relief. The Tax Extenders Act of 2009 also extends more than $7 billion of tax provisions that encourage charitable contributions, provide community development incentives, provide tax relief in the event of a Presidentially-declared disaster, and support the deployment of alternative vehicles and alternative fuels. The Tax Extenders Act of 2009 provides this relief without adding to the deficit.
Update:
Just Got Off The Phone With Jim Himes
He gave two reasons for voting against the bill:
1. It only applied to provisions expiring in 2009. He really wanted the Low Income Housing Tax Credit which expires in 2010 included. People need to know way ahead of time if those tax breaks will be available. Not extending the credit now will have a devastating effect on 100O's of units which were to be built in New Orleans.
2. More importantly, as far as he is concerned, the tax rate on carried interest, which is income people who manage real estate investment funds, Jim's main area of focus, receive, because of risks that they incur, should not be identical to the tax rate on ordinary income. This applies to hedge funds and investment funds as well. It's not capital gains, Jim says, which is the rate that it's currently taxed at, but Jim wasn't happy that the rate wasn't adjusted downwards to make some allowance for the additional risks fund managers incurred.
I'll accept Jim's concerns as reasonable and somewhat legitimate, and withdraw my over-the-top rhetoric, but I don't think these are sufficient reasons to vote against the bill.
We also talked about his vote against the new Estate Tax. His main concern here was that imposing the new Estate Tax exemptions will increase the deficit by $280 billion. I asked if that meant he was in favor of lowering the exemption, or raising the tax rate to limit the financial impact, but he wasn't willing to commit to either of those remedies. What he favored was a VAT tax on luxury items, which then would allow the exemption to remain at $3.5 million, which he also felt should have been indexed to inflation.
Jim's votes on these issues do not, in my opinion, reflect mature thinking about the overall consequences of the legislation, but rather, as he himself conceded at one point during our conversation, a certain grumpiness that specific provisions weren't exactly what he wanted, or that what he wanted wasn't even giving a hearing.
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