Accord Near on Extension of Tax Cuts

Republicans have reached agreement in principle on legislation to extend tax cuts on capital gains and stock dividends for two years and keep 15 million middle-income Americans from getting hit with a tax designed for the wealthy, GOP aides said late Tuesday.

However, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) is linking final passage of the measure to achieving an agreement with House Republicans over the outlines of a second package of tax breaks, according to Republican staffers, who spoke on condition of anonymity.

The agreement was reached among the Republican members of a joint House-Senate conference committee that was appointed to resolve differences between the two chambers on the tax legislation and came after President Bush summoned GOP leaders Tuesday for a strategy session.

Democrats contend the country can’t afford Bush’s tax cuts at a time of record budget deficits and spending on the Iraq war, and amid the escalating costs for Social Security and Medicare.

The tentative agreement would provide $70 billion in tax relief by extending for two years the 15% reduced tax rate on capital gains -- the profits from the sale of assets -- and dividends.