May 16, 2003
Senate approved $350 billion tax cut; Voinovich vote seals the deal
By PAUL M. KRAWZAK
Copley Washington correspondent
WASHINGTON — Continuing to play a pivotal role in the national debate over job creation and tax cuts, Sen. George Voinovich on Thursday cast a decisive vote allowing the Senate to pass a $350 billion tax cut.
“I feel comfortable with it,” the Republican from Cleveland said of the plan, which reduces taxes on stock dividends, capital gains and small businesses, accelerates reductions in income taxes and provides $20 billion in aid to states and local government.
On an almost straight party-line vote, the GOP-majority Senate passed the tax cut 51-49. Sen. Mike DeWine, R-Cedarville, and Voinovich joined the majority of Republican senators in voting for the bill.
Voinovich, a self-described deficit hawk, almost single-handedly has prevented the Senate from approving a larger reduction more to President Bush’s liking. Though he favors tax relief, he has insisted the plan cost no more than $350 billion in lost revenue to the Treasury.
Bush has called for a tax cut of at least $550 billion over 10 years, which he said would pump life into the economy and create jobs. The House passed a $550 billion tax cut.
Democratic critics of the Senate bill have derided it for being dishonest in the way it keeps its costs down. The bill specifies that tax cuts affecting dividends and businesses will expire in several years. Realistically, it will be hard for Congress not to extend those tax cuts when they expire, adding to the growing federal budget deficit, opponents of the tax cut said.
Voinovich argued that the expiration dates are a plus.
“I believe that sunsetting is a positive thing,” he said, using a term that describes expiration of a program. “It’s going to force us to look at what we’ve done and determine whether or not it’s really going to have an impact on the economy.”
The Senate plan provides for billions of dollars in offsetting tax increases to keep the net cost of the tax cut passed Thursday at $350 billion.
The differing House and Senate versions of the tax cut, which are $200 billion apart, now must go to a conference committee where negotiators will attempt to fashion a compromise.
Voinovich expressed confidence that the final plan approved by Congress would not exceed a cost of $350 billion.
“I think that this administration and this Senate understand that $350 billion plus offsets is it,” he said. Voinovich added that he was “absolutely confident” that Senate Finance Committee Chairman Charles Grassley, R-Iowa, would not let a higher tax cut emerge from the conference committee before going to Congress for approval.
Prior to Thursday’s vote, Voinovich announced he had decided to support an amendment by Sen. Don Nickles, R-Okla. It would reduce taxes on dividends and capital gains more than an earlier version of the tax cut approved by the Senate Finance Committee. That amendment won approval after Vice President Dick Cheney broke a 50-50 tie in the Senate.
The earlier version exempted the first $500 in dividend income from taxation, as well as 10 percent of additional income, beginning next year. The Nickles amendment would increase the exemption to 50 percent of dividends in 2003 and 100 percent in 2004, 2005 and 2006.
Voinovich “concluded that the Nickles amendment is more stimulative to the economy than what came out of the Finance Committee,” he said.
In addition, the Nickles version allows small businesses to deduct up to $100,000 in investments from their taxes, compared to a maximum of $75,000 in the earlier version.
“I’ve been talking with businesses throughout the state of Ohio. They said this is a good provision,” Voinovich said.
The increased deduction would expire after 2007, causing some to question its effectiveness. Voinovich, however, said the time limit would encourage businesses to make investments right away, spurring economic growth.
Voinovich succeeded in getting a provision into the bill to create a commission that would make recommendations for comprehensive tax reform.
“I’ve got a commitment that we’re going to get this commission in place and we are going to do some real honest to God tax reform,” he said.