The Senate and House continue in their efforts to pass the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213). Both parties are debating the cost of the bill and the tax offsets.

On June 17, 2010, Senate Finance Chair Max Baucus (D-MT) offered his latest version of the bill. He has been exploring ways to reduce the cost and gain more votes for the bill. Sen. Baucus received 57 votes of the 60 votes necessary to pass the bill.

Sen. Ben Nelson (D-NE) indicated that he was not going to vote for the bill until it is deficit-neutral. Sen. Olympia Snowe (R-ME) is a potential Republican vote for the bill. However, she and her Senate colleague Susan Collins (R-ME) both wanted "to see more of the bill paid for."

Sen. Baucus and Majority Leader Reid will pursue additional modifications to the bill and submit a new version next week. The current bill offsets include increased tax on hedge fund managers who would report 75% of payouts as ordinary income. Sen. Baucus also has increased the oil-spill tax from 8 cents to 49 cents per barrel in the latest version. His bill retains the $24 billion in Medicaid funding for the states.

Sen. John Thune (R-SD) proposed an amendment that would use unallocated stimulus funds to pay for the bill. Sen. Thune suggested that this would be a solution that would avoid adding over $50 billion to the debt.

In support of the Thune amendment, Sen. Judd Gregg (R-NH) indicated that the proposal by Sen. Thune "is the way we should be governing now, which is to pay today for things we want to buy today." Sen. Baucus and other Democratic supporters of the bill opposed the Thune amendment and it failed on a 57-41 vote.

Editor's Note: The Senate is experiencing difficulty in finding 60 votes for the $50 billion deficit of the current tax extenders bill. While progress is difficult in the Senate, the need to pass tax extenders, Medicaid and unemployment benefits is sufficiently great that Senate action during July is quite probable. The current bill still includes the seven charitable tax extenders. If the bill passes in July, the IRA charitable rollover will be available again in 2010.