Senate Finance Panel Approves Economic Recovery Tax Cuts

by Leroy Bkaer, Tax-News.com, New York

29 January 2009

Economic recovery legislation made further progress through the United States Congress on Tuesday after the Senate Finance Committee approved approximately USD522bn in tax cuts, incentives, and other investments to stimulate the American economy.

The legislation spearheaded by Chairman Max Baucus (D-Mont.) now includes USD342bn in tax cuts for families and businesses, with a particular focus on creating jobs in the green energy, highway, and school-building sectors. The package also includes approximately USD180bn in investments to create jobs in health information technology, to help out-of-work Americans keep their health care coverage and find new employment, and to give aid to struggling state economies.

A number of amendments from Republicans and Democrats on the Committee were added to the markup during yesterday's business meeting, notably a USD69.8bn measure from Senators Chuck Grassley (R-Iowa) and Robert Menendez (D-NJ) to protect as many as 24 million working families from the alternative minimum tax this year, and an amendment from Senators Jeff Bingaman (D-NM), Blanche Lincoln (D-Ark.), and Kent Conrad (D-ND) to change the way fiscal relief funds would be distributed among states.

The Finance economic recovery provisions will now be combined with Appropriations Committee legislation for consideration by the full Senate.

"Thanks to this bill, working families will get a tax cut to make ends meet a little easier each month. Seniors, veterans, and disabled Americans will get some much-needed financial help, too. And American businesses will get tax relief and incentives to retain the jobs they have, and create new jobs when they can,” said Baucus.

“The workers hardest hit by our economic crisis can find some relief here, with better unemployment insurance and help holding on to their health insurance. Now we’re going to combine our work with the Appropriations Committee’s work. I have every confidence that the final economic recovery bill will stabilize our economy and get America moving in the right direction again," he added.

Bipartisan amendments were also accepted into the legislation prior to Tuesday’s markup. These include:

• Tax credits for broadband technology investment in rural and underserved areas to spur jobs and economic opportunities;
• Greater availability of renewable energy investment tax credit to allow new projects, job creation, and growth among clean energy producers;
• A doubling of the number of vehicles eligible for the plug-in electric credit, to further promote green energy and create manufacturing jobs; and
• Greater ability for businesses to write off recent losses by extending the carry back period for net operating losses from two years to five years for losses arising in taxable years ending in 2008 and 2009.

Recommended