Local governments could line up billions of dollars in new construction projects under the latest in a series of election-year jobs bills Democrats are pushing in Congress as unemployment hovers near 10 percent.
A bill combining $13.2 billion in interest subsidies for local construction bonds with $3.6 billion in tax cuts for small businesses cleared a key procedural vote in the House on Tuesday, 233 to 187. Final passage in the House could come later Tuesday or Wednesday.
The legislation, which would then go to the Senate, would provide states $2.5 billion for temporary welfare payments to needy families through September 2011.
The bill is part of the Democrats' strategy to pass a series of jobs measures as congressional elections approach in November. Last week, President Barack Obama signed a bill that offers tax breaks to companies that hire unemployed workers.
"Now is not the time to sit back and relax but to continue to give this economy a shot in the arm that it needs in so many areas," said Rep. Dennis Cardoza, D-Calif., "We will get the extra stimulus we need to overcome this recession once and for all by passing this and other measures that will be coming before us."
Republicans argue that the tax cuts in the bill are too small and the spending too inefficient to make any significant dent in joblessness.
The Democrats "desperately want to be seen by the people as doing something on jobs — anything," said Rep. Lincoln Diaz-Balart, R-Fla. But, he added, "This bill will do nothing to create jobs just because the majority has slapped 'jobs' onto the title of the bill."
The largest provision in the bill would expand the Buy America Bonds program, which subsidizes interest costs paid by local governments when they borrow for construction projects. The program, which was included in the massive economic stimulus package enacted last year, would be extended though March 2013, at a cost of $7.5 billion.
The bill would also exempt long-term investments in certain small businesses from capital gains taxes. The economic stimulus package allowed investors to exempt 75 percent of the gains from such investments for 2009 and 2010. The new bill would exempt all the gains from taxation for qualified stock purchased from March 15 through the end of 2011, at a cost of about $2 billion.
The bill would be paid for in large part from a series of measures designed to crack down on companies that avoid taxes through aggressive tax planning.
The biggest provision would raise an estimated $7.7 billion by preventing some foreign multinational corporations from avoiding withholding taxes on U.S. profits by funneling those profits through subsidiaries in different countries.
The bill would raise $4.5 billion over the next decade by limiting taxpayers' ability to avoid gifts taxes by setting up trusts known as Grantor Retained Annuity Trusts, or GRATs. Another provision would raise $2.5 billion by increasing reporting requirements for people who write off expenses on rental property.
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