Daily Tax Update - March 01, 2006

GRASSLEY SAYS BUSINESS EXTENDERS COULD MOVE OUTSIDE OF TAX RECONCILIATION BILL:
Yesterday, Senate Finance Committee Chairman Charles Grassley (R-IA) said that the $70 billion cap on the tax reconciliation bill could require that the business "extenders" be considered outside of the reconciliation process. The business extenders include provisions such as the research credit, the above-the-line deduction for teachers' classroom expenses, and the work opportunity tax credit.

  • Republican leaders want the final reconciliation package to contain an extension of the reduced rates on capital gains and dividends. Including both the AMT patch and a two-year extension of the capital gains and dividend provisions would exceed the $70 billion cap. Grassley said, "I think that it's easier for me to get a bill through the United States Senate that has AMT in it. If there's not room for both AMT and the business extenders, it seems like if history's an example . . . it's probably going to be easier to pass business extenders by themselves because they have really bipartisan support."
  • The conferees were expected to convene their first formal meeting this week, but nothing has been scheduled. Senate Finance Committee member and conferee Jon Kyl (R-AZ) said, "All we've done is talk a little about the process: when we're going to get started, what we need to do to get ready."

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