Originally created 06/08/01

Tax cut talk will remain



WASHINGTON - The big tax cut signed by President Bush is only the beginning, Republican congressional leaders say. And they're not alone.

"Every lobbyist on Capitol Hill says that their tax cut is in the next bill," said Rep. Charles Rangel of New York, a senior Democrat on the tax-writing House Ways and Means Committee.

Reductions in capital gains taxes, tax breaks for energy alternatives, production and conservation, small business tax relief linked to a minimum wage increase and tax advantages for health care are on the list.

Big business is pushing for permanent extension of the research and development tax credit, an item added and then dropped from the 10-year, $1.35 trillion tax cut package Mr. Bush signed into law Thursday.

"Manufacturers still view this legislation as just the beginning," said Jerry Jasinowski, the president of the National Association of Manufacturers.

Mr. Bush wants a $500 charitable tax deduction for people who don't itemize, and lawmakers of both parties say the alternative minimum tax must eventually be fixed to avoid striking an estimated 35.5 million taxpayers by the end of the decade.

An even more pressing must-do tax issue is extending a moratorium on Internet taxation, which expires in October.

The Democratic takeover of the Senate could make it much more difficult for Republicans to push their favorite cuts through. Many reductions, however, have bipartisan support and could find their way to Mr. Bush's desk as part of other legislation.

For instance, Democrats say a bill to give patients greater rights in dealing with HMOs is one of their top priorities. Sen. Don Nickles, R-Okla., said that could be a vehicle for proposals to provide tax credits to help people buy health insurance and for deductions for the costs of long-term health care.

"We ought to be able to pass some tax relief with that," Mr. Nickles said of the patients' rights bill.

Other top candidates for further tax relief this year, according to lawmakers and lobbyists:

House GOP leaders plan to send the Senate legislation making the $1.35 trillion in tax cuts permanent. Under budget rules, the bill now will expire Dec. 31, 2010, meaning that all the tax cuts would disappear after that.

"I hope and expect it will be made permanent," Mr. Nickles said.

Democrats want to increase the $5.15-an-hour minimum wage by at least $1 and have been willing in the past to support tax cuts to offset those costs on small business. These could include 100 percent tax deductibility for the self-employed, increasing the business meals deduction now at 50 percent and increasing writeoffs or depreciation for business investment.

Some lawmakers favor including a cut in capital gains taxes from 20 percent to 15 percent, but that might also move as a freestanding bill in the House. A capital gains cut almost certainly will be voted on later this year.

Mr. Bush has proposed as much as $10 billion in tax breaks over 10 years to boost energy supplies, conservation and alternatives. That could become part of an overall energy bill.

Specifics include tax credits for residential solar energy systems and the purchase of fuel cell or gas-electric hybrid vehicles; extension of credits for electricity produced by wind and biomass and creation of a credit for electricity produced from landfill gas, and breaks for marginal oil and gas production.

Extension of the moratorium on taxes that single out the Internet. There is likely to be a major battle in Congress over whether states should be barred from collecting sales taxes on items purchased over the Internet as lawmakers debate renewing the moratorium.

Whatever bill emerges could become a vehicle for other expiring tax provisions to be renewed, including the R&D credit, credits for companies that hire former welfare recipients and people from certain disadvantaged groups and a provision allowing businesses to defer taxes on certain financing income.



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