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Bush Signs Tax Extenders Bill

by Mike Godfrey,, Washington

22 December 2006

President George W. Bush has signed into law a bill which extends and renews a number of popular tax breaks for business and individual taxpayers, representing one of the last major actions of the Republican-controlled 109th Congress.

Among the major tax measures in the Tax Relief and Health Care Act of 2006 are provisions to extend the R&D tax credit through 2006, which, at a cost of $16.5 billion, is the most expensive of the tax measures. Other tax extenders include the tuition expenses deduction, the New Market Tax Credit, the state and local sales tax deduction, the Earned Income Tax Credit for Combat Pay, the Qualified Zone Academy Bonds and the Teacher Classroom Expenses Provision.

The legislation also contains a number of provisions providing tax incentives for investment in the production of environmentally-friendly energy, including the extension of tax credits for the production of wind energy and electricity from biomass until the end of 2008, extension of the 54-cent-per-gallon tariff on imported ethanol until January 1, 2009, and a new tax incentive to produce ethanol from certain plants.

"This is a good piece of pro-growth legislation," said Bush during the signing ceremony.

"I appreciate members of my Cabinet who have joined me in thanking the Congress for their good work here at the end of this session," he added.

The bill was eventually approved by Congressional negotiators in the last few hours of the 'lame duck' session earlier this month, after receiving widespread bipartisan support in both the House of Representatives and the Senate.

Chuck Grassley, currently the chairman of the Senate Finance Committee and a key author of the legislation noted that: “This package continues tax relief without interruption."

“It prevents a tax increase for parents putting kids through college and businesses developing job-creating innovations," he added, concluding:

“Investors need certainty about tax policy before putting their money into a wind energy or biomass project. The tax extension gives them certainty for another year."

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