Senate Majority Leader Harry Reid, D-Nev., has introduced a bill to extend the Bush tax cuts and unemployment benefits.

The bill, introduced Thursday, more or less aligns with the deal struck by President Obama earlier in the week with Republican congressional leaders. It is estimated to cost $858 billion over 10 years. It would extend the current tax rates for another two years for all income levels, and provide a 13-month extension in unemployment benefits.

The bill would also provide a $120 billion payroll tax reduction of 2 percent, cutting Social Security taxes for one year to 4.2 percent. The bill would also extend the American Opportunity Tax Credit for college tuition, the Child Tax Credit and the Earned Income Tax Credit. It would also allow businesses to deduct 100 percent of investments in plant and equipment in the first year, and extend for two years the state and local sales tax deduction. In addition the bill would “patch” the AMT, extending Alternative Minimum Tax relief for two years to prevent the AMT from ensnaring millions more taxpayers.

In addition, the bill would re-instate the estate tax, but repeal the carryover basis rules. The estate tax would be capped at 35 percent, with a $5 million exemption for individual estates and $10 million for couples.

The bill would also extend incentives for the “clean energy” industry, including incentives for biodiesel and renewable diesel fuel, the credit for refined coal facilities, a new energy-efficient home credit, excise tax credits and outlay payments for alternative fuel and alternative fuel mixtures, provisions related to alcohol used as fuel, the energy-efficient appliance credit, the credit for non-business energy property, and alternative fuel vehicle refueling property.

“I refuse to let Republicans delay tax cuts for the middle class and small businesses any longer,” Reid said in a statement. “This bill is not perfect, but it provides the economic boost middle-class families and small businesses in Nevada and across America need.”

The bill, which has been introduced as an amendment to an airport improvement bill, is expected to come up for a vote Monday in the Senate. However, House Democrats threatened Thursday to block the tax cut bill in the House, saying the legislation provides too many tax breaks for upper-income taxpayers and that Republicans need to provide more concessions (see House Democrats May Block Tax Cut Bill).

Other provisions in the bill would extend the deduction for out-of-pocket expenses by elementary and secondary-school teachers for school supplies and other expenses, as well as contributions of capital gain real property for conservation purposes.

Also in the bill are provisions relating to extending tax-free distributions from individual retirement plans for charitable purposes, the research credit, the New Markets Tax Credit, the mine rescue team training credit, the seven-year recovery period for motorsports entertainment complexes, empowerment zone tax incentives, and the election to expense mine safety equipment.

Enhanced charitable deductions would be extended for contributions of food inventory, book inventories to public schools, and corporate contributions of computer invenotry for educational purposes.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access