Republicans Agree To Push For Five Year Tax Cut Extensions

by Mike Godfrey, Tax-News.com Washington

17 September 2004

According to the Senate Majority Leader Bill Frist (R – Tenn), Republicans have agreed to push to extend three key tax cuts by five years, signalling that an end to the deadlock on this issue may be close at hand.

Disagreement over the course of the bill within the Republican ranks has delayed its passage for a number of weeks. However, reports have indicated that Frist wants the measures to move on the Senate floor by next week.

At stake are three tax breaks passed under the Bush Presidency, including the $1,000 child tax credit, a tax break offsetting the ‘marriage penalty’ and the 10% lower tax bracket.

Failure to extend these measures beyond the end of the year will mean a reduction in the child tax credit to $700, loss of some of the marriage penalty breaks and a scaling back of the 10% bracket that would mean virtually all taxpayers will see an effective increase in their taxes next year.

The White House is pushing for a five year extension to these tax cuts, but for certain Republicans this is an unpalatable proposal given the record budget deficit.

Some are willing to accept a three year extension, while others have been insisting that offsetting measures are applied to mitigate the cost, which has been estimated at $130 billion.

Meanwhile, Senate Minority Leader Tom Daschle (D – S.D), has told reporters that he would “very reluctantly” support a five year extension to the cuts without the offsetting measures.

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