- The Washington Times - Wednesday, November 16, 2005

The Senate Finance Committee yesterday approved a $59.6 billion tax-cut extension after removing a break for investors that was opposed by Democrats and a key centrist Republican but favored by conservatives.

Meanwhile, the House Ways and Means Committee last night, by a vote of 24-15, approved a $31.9 billion tax-cut bill that contains the provision, which would extend lower tax rates for investment income. The estimated cost for each bill is measured over five years.

Republicans said gains in the stock market and economy would be lost without its extension.

“Contrary to what you might read on the editorial pages, this is not new tax relief for the so-called wealthy,” said Ways and Means Chairman Bill Thomas, California Republican, “Rather, it is largely an extension of current law.”

The Senate bill passed the Finance Committee by a 14-6 vote, with the support of all Republicans and three Democrats — Sens. Charles E. Schumer of New York, Max Baucus of Montana and Blanche Lincoln of Arkansas. It could be brought up for consideration on the Senate floor today.

Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican, had struggled for days to gain the key vote of Sen. Olympia J. Snowe, Maine Republican. She and several Democrats objected to a provision in the bill that would extend a reduced tax rate for capital gains and dividend income, saying the rate isn’t set to expire until 2008.

Congress should save money by focusing only on tax cuts set to expire this year, Mrs. Snowe said. “That’s the practical approach, rather than extending those that expire three years from now,” she said.

Mr. Grassley agreed to drop the provision.

Conservatives on the Finance Committee reluctantly voted for the bill without the provision but pledged to reattach it when the final bill is negotiated in conference with the House.

“I’m confident we’ll be able to do so, or I wouldn’t be able to support this,” said Sen. Jon Kyl, Arizona Republican.

Conservatives said extending the reduced tax rate would benefit businesses as well as senior citizens and others who depend on income from their investments.

Democrats warned against adding the provision later.

“I hope we keep this bill the kind of bill it is now,” Mr. Schumer said, describing the legislation as a “moderate/centrist” bill.

The Senate bill also calls for about $7 billion in tax relief for people and businesses affected by hurricanes this year.

It extends a research and development tax credit and a deduction for some school tuition and related costs.

The Senate proposal also extends a provision supported by many Democrats that protects millions of people from the alternative minimum tax. The House bill does not contain the provision.

Top House and Senate Republicans are pushing to pass a tax-cut extension as well as a measure to trim the federal government’s entitlement spending. The Senate has approved a bill to cut $35 billion from entitlement programs, but a $50 billion savings proposal in the House was derailed last week. Leaders hope to bring it up later this week.

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