Wednesday, September 17, 2008

Senate Serves Up Tax Breaks

To be offset by taxing oil companies and Wall Street?

Yeah, right, tell me another!!!!

"Senators agree on tax relief package" by Associated Press | September 17, 2008

WASHINGTON - Senate leaders said yesterday that they had broken a months long impasse over a tax break package that would bring billions of dollars in relief to individual and business taxpayers, developers of clean energy resources, and people threatened by the alternative minimum tax.

Senate Finance Committee chairman Max Baucus, Democrat of Montana, and his Republican counterpart on the panel, Charles Grassley of Iowa, said the package could reach the Senate floor this week. The tax package is one of the last major issues that Congress must address in the weeks before its scheduled adjournment for the year.

The agreement includes some $17 billion in clean energy tax incentives and provides for a fix, at an estimated cost of $64 billion over 10 years, to shield more than 20 million taxpayers in danger of getting hit by the alternative minimum tax.

The AMT was enacted in 1969 to catch a small number of very rich tax dodgers, but was never adjusted for inflation and hits more upper-middle income people every year unless Congress acts to protect them.

The Baucus-Grassley measure would also extend tax breaks that expired at the end of last year or are set to die out at the end of this year. Those include breaks for college tuition, state and local sales taxes, and research and development for US businesses.

Grassley noted the agreement also included $7 billion in tax relief to help Midwestern states recover from floods and tornadoes that hit this summer. House Democrats have insisted they will reject any legislation to renew expiring tax bills that adds to the deficit.

Baucus and Grassley said the clean energy tax incentives would be paid for with such measures as freezing the tax deduction for the domestic manufacturing activities of American oil and gas companies and tightening the rules by which oil and gas companies pay taxes on income earned overseas.

They said the extension of expiring family and business tax cuts, which include expansion of the child tax credit and legislation providing parity for mental health treatment, would be partially offset by closing loopholes by which hedge fund managers use offshore corporations to defer taxes on compensation received for investment services.

The AMT fix would not be paid for.