WASHINGTON, DC-Monday evening it appeared that a controversial and fiercely debated $848-billion tax cut package would pass in the Senate. All that remains, barring an eleventh hour surprise, is the political posturing, not that that hasn’t been going in full force since the beginning. 

More than 70 Senators have voted to pass the legislation, more than enough to move it to the next stage, which is to the House for consideration. That is expected to happen by mid-week. It is possible that House Democrats could derail the package, but the polls showing broad support by much of the country will surely factor into their decision. 

Much of the package focuses on extending the tax breaks passed under the Bush administration, for which Republicans have fiercely advocated, and Democrats have decried as adding to the ever-mounting budget deficit. Most of the 11 votes against the package in the Senate were by Democrats. 

Other elements of the package extend unemployment insurance through 2011 along with a new 2% payroll tax reduction for all workers. Energy and other tax breaks that were expiring this year have also been folded into the package. 

The tax characterization of carried interest--to date, at least--has remained unchanged, Real Estate Roundtable CEO Jeff DeBoer is pleased to report. “Job creation is what the economy needs, and, as we have been saying for some time, the proposed carried interest tax hike was a job killer,” he tells GlobeSt.com. “We are pleased it now appears to have been set aside.”

 President Obama, to the chagrin of much of his party is supporting the agreement, pointing to the benefits it is bringing to middle-class families. It will also, he has said, remove the uncertainty facing businesses and prompt them to begin hiring. 

Indeed, that has been a constant refrain by the business community as well as advocates of the tax cuts. If such a package were to pass, so the theory goes, businesses would feel more comfortable taking on new employees.

This thinking is simplistic at best and a fallacy at worst, says Harold Levine, a tax partner at the New York City law firm Herrick, Feinstein. “First of all, tax certainty has not really happened yet, in that the extension of the cuts appears to be only temporary,” he tells GlobeSt.com. “Secondly, not all kinds of tax certainty drive the economy.” Tax certainty at higher rates, for example, would probably be perceived as a negative economic factor, he said. So lower tax rates--rather than some vague notion of tax certainty--will spur the markets and dealmaking by improving after-tax returns.

“The reality is that businesses will act more prudently--but not necessarily thrive--as a result of the extension of the tax cuts,” Levine says. “In the face of likely rising tax rates, many businesses were contemplating sales of assets or entire businesses before the end of 2010, to realize gain and pay reduced taxes. Now, with the extension of those tax rates, businesses are delaying these sales. Many of these deals will occur at some point.” 

It’s good that the market is not reacting to non-business pressures such as the tax landscape, he adds, so the extension of the tax cuts allows the market to work at its own pace.