Congress Fails To Agree On Tax Cut Extensions

by Mike Godfrey, Tax-News.com, Washington

26 July 2004

Congressional lawmakers will now have to wait until after the summer recess before action can be taken to extend several key tax cuts, after negotiations made little progress last week.

Legislators have been debating for some time the merits of extending various middle class tax cuts including the $1,000 child tax credit and relief from the marriage penalty.

President Bush had insisted that the measure in his 2003 tax relief package be extended for at least five years. However, resistance from certain Republicans mindful of the implications this will have for the federal budget deficit means negotiations must now resume after the August recess.

Work will also resume on an extension to relief from the Alternative Minimum Tax, which was initially designed to ensnare only the wealthy, but which is impacting increasing numbers of middle class taxpayers.

Failure to enact a significant extension of the tax cuts before November’s presidential election will effectively result in a tax increase for many taxpayers in 2005.

However, the White House said it remained "confident that we'll be able to successfully work with Congress to deliver meaningful extensions on behalf of the American people."

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