House Takes Up Senate-Passed Tax Break Package
September 24, 2008 - 7:56 AMFate is uncertain
The tax package passed the Senate on Tuesday on a 93-2 vote, but faces obstacles in the House, where fiscally conservative Democrats object to tax relief that is not paid for with an increase in revenues elsewhere.
The House plans to offer a competing version as early as Wednesday that raises more revenue by closing loopholes used by hedge fund managers and corporations doing business overseas. That could complicate getting a bill to the president before Congress adjourns for the year.
The Senate-passed bill provides more than $17 billion in renewable energy tax incentives that the solar and wind industries say are crucial if they are to become significant sources of energy in the near future. It renews the research and development tax credit, at a cost of $19 billion, that businesses have come to rely on.
It gives a one-year reprieve, at a cost of $64 billion, to more than 20 million taxpayers who would get hit by the AMT, which is supposed to only affect the very rich. The bill also gives tax breaks to natural disaster victims and ensures mental health parity in health insurance benefits.
The legislation also renews expired, or soon-to-expire, tax breaks for people paying state and local general sales taxes, people with higher education tuition costs, those receiving child tax credits and teachers paying school expenses out of their own pockets.
"These tax measures represent real support for the American families, workers and businesses that need a break now," Senate Finance Committee Chairman Max Baucus, D-Mont., said. "This is must-do legislation," added his GOP counterpart, Charles Grassley of Iowa.
But while the energy measures are paid for by limiting tax breaks for the oil and gas industries, the AMT fix and most of the business and individual tax breaks are not. The cost would be more than $100 billion over 10 years.
"I am pleased that the Senate has moved forward on passing these important tax provisions," House Majority Leader Steny Hoyer, D-Md., said in a statement. But he said that "in keeping with our commitment to fiscal responsibility," House Democrats will introduce a bill that does not add to the national debt.
Senate Majority Leader Harry Reid, D-Nev., pleaded with the House not to tinker with the Senate-passed package, warning that imposing offsets would kill the bill because Republicans object to matching tax relief with new tax revenues. "If the House doesn't pass this, the full responsibility of this not passing is theirs, not ours."
The White House also has strongly objected to what it regards as tax increases to match renewal of tax relief measures.
Congress could adjourn for the year as early as this week, adding to pressure to reach agreement on the package quickly.
Last year Congress waited until late December, disrupting the early IRS filing season, because of the dispute over whether the AMT fix should be paid for. In the end it was not.
The energy legislation extends for eight years, through 2016, investment tax credits for the solar power industry and for homeowners who install solar and wind equipment.
Taxpayers can claim a credit of up to $7,500 for purchasing plug-in electric cars, and production credits are extended to wind, biomass and marine _ waves and tide _ facilities. There are incentives to use smart meters for more efficient home energy use and to promote clean coal and biodiesel production.
The legislation additionally includes more than $8 billion in tax relief for Midwestern states hit by natural disasters this summer and for the more recent victims of hurricanes in Texas and Louisiana.
It requires private insurance plans that offer mental health benefits to offer benefits equivalent to those of medical-surgical treatments.
The bill is H.R. 6049
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