Senate Votes to Extend Tax Breaks for Families, Firms

The Senate moved Friday to salvage a small part of the omnibus tax-cut bill that President Clinton vetoed in September, approving legislation to renew some existing tax breaks for individuals and corporations that otherwise would expire this year.

The bare-bones measure, approved on a voice vote without debate, would enable many upper-middle-income taxpayers to continue to qualify for “family” tax breaks--such as the $500-per-child tax credit--that otherwise would be erased by a levy imposed on high-income taxpayers.

It also would extend the tax credit that businesses are permitted to take for spending on research and experimentation--a provision that is designed to encourage the development of high-technology.

Senate Majority Leader Trent Lott (R-Miss.), in a surprise move, decided to bring the tax measure to a vote so that both houses of Congress would have time to pass it before recessing for the year, probably in mid-November. Clinton is expected to sign it when it reaches his desk.

Besides the provision preserving the family tax breaks and the research-and-experimentation tax credit, the bill also would continue a provision that permits employers who reimburse their workers for college costs to claim those outlays as deductions.

It would extend the life of a law that provides tax credits for businesses that hire welfare recipients and a provision that would allow financial services companies to defer payment of taxes on their investments overseas until the returns are brought back into the United States.

Finally, it would extend, through July 1, 2004, a provision that lets businesses that use wind or plant matter to generate electricity claim a tax credit to cover their costs and would broaden the benefits to apply to firms that use poultry waste to make electricity.

The last provision was inserted in the bill by Sen. William V. Roth Jr. (R-Del.), chairman of the Senate Finance Committee, who represents one of the nation’s biggest poultry-producing states.

The House Ways and Means Committee already has approved a similar version of the bill, but House leaders have not yet scheduled it for a floor vote. Friday’s Senate action means that the bill will go immediately to a conference committee as soon as the House passes its bill.

The differences between the Senate and the House Ways and Means Committee versions of the bill are relatively small. The House measure contains many of the same provisions as the Senate bill but would extend them beyond the 18 months that the Senate bill would.

The Senate version, however, will be easier for congressional budget-makers to handle because its cost--$8.5 billion in revenues--would be fully offset by spending cuts made elsewhere in the budget.

By contrast, the House bill would drain $23 billion in revenues, but its cost would not be offset by spending cuts. Thus, its passage would drive Congress closer to using part of the surplus in the Social Security trust fund, which Republicans have declared off limits.

Lott had proposed his own $33-billion “extenders” package, as the tax-cut extensions are known, but withdrew it before the Senate action Friday in the interest of pushing the bill through.

Some Democrats had warned that, if the majority leader had insisted on considering his own proposal, they were poised to tie up the measure in parliamentary maneuvering.