Senate Panel Crafts $300 Billion Tax Plan Akin To Obama's
A senior aide for Finance Committee Democrats outlined possible components of the package in a Monday meeting with other staffers. Aides present at the meeting cautioned that the package is still in flux, and the timing for committee consideration next week is still tentative.
Three business tax breaks, backed by Obama, are considered a shoo-in for the Senate stimulus bill: an extension of an upfront write-off of 50% of new equipment purchases; an extension of the higher $250,000 expensing limit for small businesses; and a provision allowing companies with losses in 2008 or 2009 to carry those losses back for five years. Current law allows only a 2-year loss carryback period.
The costliest item in the tax package is likely to be a $500-per-worker tax credit, which will be delivered to workers in small chunks through reduced income tax withholding. That temporary refundable credit would cost as much as $150 billion.
In addition to that new credit, Senate Democrats are eyeing an expansion of the child tax credit, in order to allow families with income of less than $8,500 to benefit. They are also considering boosting the earned income tax credit for families with three or more children, these aides said.
Those proposals, along with Obama's plan for a $500 refundable credit for workers, could be a flashpoint for Republican opposition in the Senate.
Republican Reaction Reaction to Obama's tax proposals from Republicans and the business community on Monday was positive, if cautious.
"At first blush, it sounds like there could be some promise there," said Eric Ueland, vice president at lobbying firm The Duberstein Group and former senior adviser to Senate Republicans. "Of course, everyone will be interested in the details."
"The tax cuts are large enough to make a difference and will benefit individuals and businesses, both of which are hurting," said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.
But Democratic proposals to expand refundable payments to low-income workers through the tax code will draw fire from Republicans, Senate GOP aides said.
Besides any proposed expansions of the child tax credit and earned income tax credit, under the work tax credit, even workers who owed less than $500 in income taxes would benefit from a full $500 credit.
"If the government is writing checks in excess of people's tax liability, that's not tax relief. It's disguised spending," said one Senate Republican aide.
New Jobs Credit Less likely to be included in the Senate package, but still possible, is an Obama proposal to give a tax credit to firms for new hires or retaining workers that otherwise would face layoffs.
Senate committee staff is having difficulty crafting a provision that would be targeted to only new jobs or jobs that are truly endangered.
"The problem in the past has been, how can you define whether this is a new job. That's been a hard thing for Treasury to get their arms around," said Ueland.
Meanwhile, the $500 worker tax credit for individuals is being delivered by directing employers to withhold less income taxes over a period of several months. Obama aides and lawmakers believe taxpayers will be more likely to spend that money than they would a one-time $500 rebate.
"One of the virtues, from the administration's point of view, of making an adjustment to the payroll tax is that the benefit dribbles out. People will spend it, as opposed to getting a check for $500," said Clint Stretch, principal at Deloitte Tax LLP.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@dowjones.com
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Publié le 05 janvier 2009 Copyright © 2009 Dowjones
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