Panel Democrats Back Tax Bill That Promotes Enterprise Zones

Democrats on the House Ways and Means Committee on Tuesday endorsed a $14.5-billion tax bill that would encourage enterprise zones in depressed areas, repeal most of the luxury taxes passed in 1990 and renew incentives for job training, low-income housing and real estate development.

The omnibus legislation, which lacks the blessing of the Bush Administration and the minority Republicans on the committee, is scheduled for formal consideration by the full committee today. It may be ready for a House vote next week.

Since it contains so many provisions that President Bush has requested, however, its chances of passage without a veto appear to be better than usual for legislation originating with the Democratic-controlled Congress.

Committee Chairman Dan Rostenkowski (D-Ill.) previewed the measure in a closed-door caucus with fellow Democrats who informally endorsed the package.

It includes a variation of President Bush’s proposal to provide special tax breaks to encourage business firms to open plants in economically depressed areas and provide jobs to residents of the so-called enterprise zones.

The Democratic proposal would authorize 50 such zones--25 in urban areas and 25 in rural locations.

Under this provision, a business would get a credit against its taxes for 15% of the wages paid to employees in a zone, as well as a $20,000 tax credit for the purchase of machinery and equipment. Capital gains taxes would be waived if a zone firm’s profits were rolled over into other capital assets.

The legislation also would make permanent tax breaks that have been extended on a year-to-year basis in the past: A low income tax credit, mortgage revenue bonds, a targeted jobs credit and a qualified mortgage credit.

Several other popular measures--including business tax credits for research and development as well as educational assistance for employees--would be extended for another 18 months.

In another popular move, the bill would repeal the 1990 luxury tax on boats costing more than $100,000 and airplanes costing more than $250,000 as well as on less costly jewelry and furs. It would retain the tax on cars priced at $30,000 or more.

Critics have contended that the luxury levy, while aimed at upper-income people, has had its biggest impact on workers who produce expensive boats and planes by discouraging their sale and manufacture.