Daily Tax Update - December 9, 2011: Presidential Veto Threat Looms Over House Payroll Tax Bill

PRESIDENTIAL VETO THREAT LOOMS OVER HOUSE PAYROLL TAX CUT EXTENSION BILL:  President Obama vowed that he would veto the payroll tax cut extension bill if "extraneous" provisions were included in it.  Obama added, "Rather than trying to figure out what can they extract politically from me in order to get this thing done, what they need to do is be focused on what's good for the economy, what's good for jobs and what's good for the American people."  Obama said that Congress should not leave town until the extension is passed.  He said that he was willing to stay in Washington "as long as it takes to make sure that the American people's taxes don't go up on January 1st and to make sure that folks who desperately need unemployment insurance get that help."  Obama added, "There is absolutely no excuse for us not getting it done."

  • However, Rep. Lee Terry (R-NE) said that he is confident that if the Republican bill passes the House, the President would not veto the bill.  Terry said, "The image of him vetoing a bill with his tax holiday in it, with an extension of unemployment insurance ... because he doesn't want to deal with Keystone pipeline until after the election is absurd.  And I think he'd realize that."
  • Today, a Democratic House member also suggested that President Obama might back down on his veto threat over the controversial pipeline provision in the House bill.  Rep. Emanuel Cleaver (D-MO) said, "I think the president probably feels that throwing in the pipeline is not a good deal.  I think the president is a good-government president, but I think whether or not he will delay the deal is another issue."
Cleaver added, "I think that most of the members on the Democratic side are going to look suspiciously at that [pipeline provision]. . . . However, we've got to get a deal done and if the president was serious about vetoing that, then I have a feeling that we’re probably going to be here during the Christmas holidays."
  • Although the Senate has failed to advance versions put forth by both Democrats and Republicans, House Majority Whip Kevin McCarthy (R-CA) voiced confidence that Republicans could pass the bill next week.  McCarthy said, "It will get off the floor."  However, the House bill is unlikely to secure enough votes to pass the Senate.  Senate Majority Leader Harry Reid (D-NV) called the House Republican proposal "a partisan joke that has no chance of passing the Senate."
  • The House bill was formally introduced today and a vote is expected next week.  Leaders of both parties support extending the payroll tax cut.  However, the main sticking point continues to be how to pay for it.  Sen. Joseph Lieberman (CT-I) commented on the impasse, "It's a classic moment of this session of Congress, which is that both parties are for something and we can’t figure out how to get it done."
  • The text of the bill can be accessed here.

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2012-01 provides the optional standard mileage rates for substantiating the amount of deductible expenses for using an automobile for business, moving, medical, or charitable purposes.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
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