WASHINGTON — The Senate failed to muster enough votes Tuesday night to limit debate on President Obama’s American Jobs Act, which was modified by the Senate majority leader to include a millionaire’s surtax instead of a cap on the benefit of tax-exempt bond interest and other tax preferences and deductions.
The vote, mostly along party lines, fell short of the 60 votes needed for cloture to avoid a filibuster.
The vote came after 16 of 22 Democratic governors sent a letter to House and Senate leaders urging “swift consideration” of the jobs act.
The bill would exempt tax-exempt bonds issued in 2011 and 2012 from the alternative minimum tax, as well as authorize creation of a national infrastructure bank.
Senate Majority Leader Harry Reid, D-Nev., modified the bill to impose a 5.6% surtax on those with taxable incomes of $1 million or more, which would raise about $450 million to cover the cost of the bill. Raising the top tax rate would increase demand for tax-exempt bonds.
The initial bill would have hurt munis, according to market participants, because it would have capped at 28% the value of tax-exempt interest and other tax preferences and deductions. The cap would have decreased demand for munis and raised borrowing rates for state and local governments, market participants said.
