Tax Bill Hits Snag In Senate Finance Committee

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

14 November 2005

Charles Grassley, the chairman of the Senate Finance Committee, was forced to postpone a committee vote on a $70 billion tax cut package last week after failing to gain enough Republican support for the bill.

Under Grassley's proposals, the dividend and capital gains tax cuts passed as part of President Bush's 2003 growth package would be extended for an additional year, meaning the 15% rates would remain until the end of 2009 instead of expiring in 2008.

Initially, most Republicans were pushing for a two-year extension for the cuts, but Grassley watered down the bill last week in the face of tightening budgetary constraints and criticism that taxes are being cut for the wealthy at a time when programmes such as Medicaid and food stamps are being cut.

However, the chairman was required to pull the vote altogether on Thursday after failing to win over the lone Republican dissenter, Olympia Snowe of Maine, who continues to object to this part of the bill. With all Democrats also opposed to the proposal, Snowe's approval is key to ensure a majority vote of 11-9.

The vote has been rescheduled for November 14.

Meanwhile, the House Ways and Means Committee has been working on its own tax bill, which is expected to include the two-year extension to the dividend and capital gains tax cuts when it is released later this week. However it is unclear whether it will contain a one-year fix to the Alternative Minimum Tax.

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