Senators are hoping that popular tax provisions that expired last year will be the spoonful of sugar that recalcitrant Representatives need in order to swallow the revamped financial services bailout bill.
The measure that Senators will vote on tonight includes short-term continuation of several popular individual (and business) tax breaks, as well as another patch to keep folks from paying more because of the alternative minimum tax.
Although these proposals have had bipartisan support all year, they looked dead just a couple of days ago.
But as noted in my earlier blog about the legislative stare down, when politicians return to their states and districts to campaign, they would like to have something to show that they also can provide assistance to
voters folks who aren't directly connected to Wall Street.
Let's hope that our lawmakers do indeed act, and act appropriately adult, this time.
The Senate has attached to the bailout measure its version of the House-passed
Title II: One-Year Extension of Temporary Provisions - Subtitle A: Extensions Primarily Affecting Individuals - (Sec. 201) Extends through 2008:
(1) theelection to deduct state and local sales taxes in lieu of state and local income taxes; (2) the tax deductionsfor qualified tuition and related expenses and for certain expenses of elementary and secondary school teachers; (3) theexemption from withholding for interest-related and short-term capital gain dividends received from a regulated investment company; (4) tax-freedistributions from individual retirement plans (IRAs) for individuals called or ordered to active military duty and for charitable purposes; (5) the election to include combat pay as earned income for purposes of the earned income tax credit; (6) authorityfor use of qualified mortgage bonds to finance residences for veterans; (7) special rules and definitions relating to regulated investment companies; and (8) the taxexclusion for amounts received under qualified group legal services plans.
CNN also notes that:
In addition, the bill includes relief from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called 'income tax for the wealthy."
The debate over extending AMT relief is an annual political ritual. It enjoys bipartisan support but deficit hawks on both sides of the aisle contend the cost of providing that relief should be paid for. Others argue it shouldn't be paid for because the AMT was never intended to hit the people the relief provisions would protect. Nevertheless, lawmakers pass the measure every year or two.
And the New York Times reports:
The Senate proposal would cost more than $100 billion and extend and expand many individual and business tax breaks, including tax credits for the production and use of renewable energy sources, like solar energy and wind power.
The bill would also extend the business tax credit for research and development, expand the child tax credit, protect millions of families from the alternative minimum tax and provide tax relief to victims of recent floods, tornadoes and severe storms.
Senators Obama and McCain will be there for the expected passage of the bailout bill.
But don't go making any tax or other financial plans until this is a done deal. House leaders thought they were going to approve a bailout bill earlier this week and we all know how that turned out!
Photo © 2006 Pittsburgh Post-Gazette