- The Washington Times - Saturday, October 6, 2001

Efforts to quickly write an economic-stimulus package have lawmakers and special interests rushing to get their proposals on what may be the last legislative train to leave Congress for some time.

While much of the legislation that has passed Congress since the Sept. 11 terrorist attacks have been worked out in high-level, closed-door negotiations, President Bush and congressional leaders agreed late Thursday to move an economic-stimulus bill through the regular legislative process.

"If it's done that way, the tendency to put things in will be greatly diminished," said House Ways and Means Committee Chairman Bill Thomas, California Republican. "The chances of producing a solid package [will be] greater."

There appears to be a growing consensus around a few items such as allowing firms to use enhanced expensing for capital expenditures. Mr. Bush yesterday supported some of the proposals when urging Congress to pass $60 billion in tax relief already earmarked in emergency spending.

Members from both parties would like to increase the amount of equipment small businesses could immediately write off, or expense.

Currently, a small business can deduct up to $24,000 in equipment costs annually. The deduction is phased out as expenditures exceed $200,000.

A temporary increase to expense limits would encourage businesses to buy equipment now, rather than later, thus spurring consumption and eventually production.

Some members have also proposed increasing expensing for specific items.

Akin to expensing are proposals to accelerate the rate at which businesses can depreciate items they cannot immediately expense. Some have proposed an across-the-board "bonus" by allowing businesses to immediately deduct a substantial portion of newly purchased items, but then depreciate the asset over time for the remainder of its useful life.

Others have proposed rewriting the depreciation tables to permanently accelerate the rate at which businesses can write off equipment costs.

One bipartisan group has suggested reducing from five years to one year the time it takes to write off the purchase of computer-related equipment.

Also popular is a proposal to expand a businesses' ability to use losses from this year to offset profits from previous years, thus allowing them to get a tax refund.

Currently, businesses can "carry-back" losses two years and losses that are not used to offset previous profits can be carried forward to offset future profits.

The most common proposal would extend the carry-back period to five years.

Republicans also appear willing to back a Democratic proposal to accept a rebate of payroll taxes.

While all wage earners pay payroll taxes, the proposal is intended to give money to those who do not earn enough to pay income taxes and therefore did not benefit from this past summer's tax-rebate checks.

More controversial is a Republican-led proposal to repeal the corporate alternative minimum tax (AMT).

The AMT was enacted in 1969 to ensure that individuals and corporations did not use existing credits and deductions to avoid paying any taxes.

Businesses can use the excess of AMT over regular taxes to reduce future taxes owed.

Under the proposal, businesses would be allowed to redeem all past AMT credits, thus reaping a substantial tax refund.

Dave Boyer contributed to this report.

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