Oct 11, 3:24 PM EDTSenate OKs Sweeping Corporate Tax Reform
By JIM ABRAMS
Associated Press WriterWASHINGTON (AP) -- The Senate passed a far-reaching, $136 billion corporate tax package Monday that cuts taxes for businesses ranging from film companies to bow and arrow makers while closing tax loopholes and bringing U.S. exporters in line with international trade rules.
With the 69-17 vote, the legislation that was two years in the making and required a rare weekend session in the Senate to complete, goes to President Bush for his signature.
"About 200,000 American manufacturers will receive a benefit to help create jobs," said Sen. Max Baucus, D-Mont.
Senators also passed by voice vote two spending bills for 2005, a $33 billion homeland security bill and another including $14.5 billion in relief for Florida hurricane victims and drought-ravaged farmers in the Plains states, before their belated departure for the campaign trail.
The House adjourned on Saturday after finishing its actions on the three bills.
Monday's vote was made possible by a Sunday night agreement to satisfy the concerns of several Democrats threatening to immobilize the Senate with a weeklong filibuster.
Sens. Mary Landrieu, D-La., and Edward Kennedy, D-Mass., sought to protect measures left out of the corporate tax bill, while Sen. Tom Harkin, D-Iowa, objected to a cut in spending for a farm conservation program linked to drought assistance.
In the settlement, the three senators were promised mostly symbolic votes in which the Senate will reaffirm positions it has taken in the past, but which have been opposed by House Republican leaders.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, blamed politics for the difficulties in getting the bill through Congress. "Certain members of this body don't want a Republican president signing a jobs bill a few days before the election," he said.
Harkin held up action on the hurricane aid, attached to a $10 billion military construction spending bill, to protest the decision to pay for the $2.9 billion in drought relief by cutting a farm conservation program that he has championed.
The hurricane money, intended mostly for the election battleground state of Florida, is not budgeted and will increase the federal deficit.
Landrieu won agreement for a vote on a measure giving a 50 percent tax credit to employers who compensate workers up to $30,000 in lost pay when military Reservists or National Guard members are called to active duty. It was estimated to have a $2.5 billion cost over 10 years.
Her proposal had been in the Senate version of the corporate tax bill but was taken out when House Republicans opposed it. Given that opposition, it was unlikely to win House passage.
Harkin got a vote Monday on a Senate resolution to instruct members of an upcoming budget conference committee that the Senate wants funding restored for the agriculture conservation program.
The corporate tax bill grew out of the need for Congress to respond to a World Trade Organization ruling that a $5 billion annual subsidy for U.S. exporters was illegal. As a result, 1,600 American exports to Europe are being hit by penalty tariffs that now stand at 12 percent and are rising by one percentage point a month.
The bill became the vehicle for the most significant overhaul of corporate tax law in nearly two decades. It includes $76.5 billion in new tax relief for the manufacturing sector, which was broadly defined to include oil and gas producers, architectural and engineering firms and film and music companies.
The package also provides benefits for a wide range of groups, from native Alaskan whalers, importers of Chinese ceiling fans, NASCAR race track owners and residents of states without state income taxes, who would be able to deduct state and local sales taxes from their federal tax returns.
The measure includes a $10.1 billion buyout for tobacco farmers. Several senators from both parties objected strenuously that the final version of the bill drops Senate-approved language that would give the Food and Drug Administration the power to regulate tobacco.
The Senate late Sunday approved two measures pushed by Kennedy and Harkin to reassert FDA authority over tobacco and to ban implementation of new Bush administration rules that critics say will deny overtime pay to millions of workers. Both proposals are unlikely to win approval in the House.
In addition to the tax relief for manufacturing, the tax measure has $42.6 billion in tax relief for multinational companies. All the tax breaks are paid for by $136 billion in measures intended to close corporate loopholes and tax shelters.
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The corporate tax bill is H.R. 4520
Key Elements of Corporate Tax Bill
Key provisions of the corporate tax bill before the Senate for final approval. The cost estimates over 10 years come from the congressional Joint Committee on Taxation:-Repeal tax break for American exporters that the World Trade Organization found violated global trade rules. Savings: $49.2 billion.
-Close a variety of corporate loopholes and tax shelters. One of the provisions to save $2.4 billion would tighten deduction rules for donating cars to charities. Total savings: $81.7 billion.
-Cut taxes for manufacturers and other domestic producers, a category which would include such non-factory operations as construction companies, engineering and architectural firms, film and music companies, and the oil and gas industry. Cost: $76.5 billion.
-Revise rules governing treatment of multinational corporations including allowing companies with overseas operations to bring profits back to the United States at a reduced rate for a limited time. Cost: $42.6 billion.
- Reinstates the deductibility of state and local sales taxes on individuals' federal income tax returns, which will primarily benefit residents of Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, all which have a state sales tax, and Alaska, which has local sales taxes but not a state sales tax. Cost: $5 billion for a deduction that would last only until Dec. 31, 2005.
- Reduce excise taxes on the sale of bows and arrows, fishing tackle boxes and sonar fish finders. Cost: $24 million.
Oh good... let's make our taxation much, much more difficult for us to manage.
/sarcasm
This Texan is happy.
Of course, none of use have been tracking our sales taxes for 2004...
....States that do not have State income taxes will be deductible...
Alas, no relief for California residents.
Thanks for posting this.State sales tax here in Texas is 8.25% .....
***This is hugh.***
It's more than hugh, it could be series money!
Probably won't mean a hill of beans to low or moderate income folks like me unless you spend more than you have in order to accrue tax payments in excess of standard deduction...just like any other "deduction," it is all a shell game. IMO.
The answer is a National Sales tax, IMO of course.
Let the flamers get started.
In the same bill Senator Nelson proposes to increase the IRS workforce by 180,000 in order to check each and every receipt that is submtted when applying for this deduction.
more fiddling while Rome burns.Rearrange the Titanic's deck chairs how you will, it's still going down.
I'll cheer when they pass the Fairtax.
Can we get a deduction anyway?
Live Free or Die.
The whole tax thing don't make no sense. Let's say you make $10,000. You are charged $2,000 federal tax on it. (All hypothetical low figures for the innumerate, don't get blue in the face.) Then, if you think about it, part of the $2,000 is tax on the $2,000 itself, which isn't yours since you're handing it to the welfare recipients, the starving farmers, and the shysters in Congress. What to do? Me thinks the federal income tax itself should be deductible. It's only fair.
ping
We had it before but it went away IIRC in Reagan's "reform" in 1986. Just the beginning of elimination of deductions that helped the average Joe a little .. the ones not eliminated got made subject to the 3% limit test etc. Recent changes in brackets and "marriage penalty" rates have, on the other hand, definitely helped my family. Thanks W !
And Tenneseeans, too!
I'll bet that you'll have an option:
take either the sales tax deduction, OR the income tax deduction, thus putting those of us in the 5 states with no income tax, and Tennessee, on an equal footing with the rest of the country.
And yes, you can save every little slip of paper, OR you can take the standard sales tax deduction, based on income, just like you did before Reagan did away with this tax "loophole."
The well-organized will be rewarded, as usual.
And don't forget: you pay sales tax on gasoline! LOTS of it!
The first move to eliminate the federal income tax.
How did Kerry and Edwards vote? /sarcasm?
This is seriesly hugh!