September 24,2008

Grassley: House is Playing Games with Tax Extenders, Midwest Disaster Tax Relief

M E M O R A N D U M

To: Reporters and Editors
Re: Tax extenders, disaster tax relief
Da: Wednesday, Sept. 24, 2008

Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on House efforts to rebuff tax extenders and Midwest disaster relief legislation passed by the Senate on an overwhelming, bipartisan vote of 93 to 2 last night.

“The House is trying to play games with extenders and tax relief. The Senate extenders bill was drafted in consultation with House members and includes House members’ priorities. The Senate majority leader’s got it right that the game is over. He said that if the House doesn’t pass the Senate extenders bill, ‘… the full responsibility of this not passing is theirs, not ours.’ Meanwhile, the House leaders’ disregard for Midwestern disaster victims is shameful. When New York was
attacked and New Orleans was under water, we dropped everything to give tax relief for recovery.
The victims of the Midwest’s 500-year floods deserve equitable treatment, and the Senate bill
provides it. What’s more, the Senate compromise is the only package that the White House has
indicated the President will sign. It’s time to focus on making law on these time-sensitive issues.
The House can’t ignore the fact that if they approve the Senate package, it will become law. All the other machinations and maneuvers won’t.”

Details of the Senate-passed extenders bill follow here.

FOR IMMEDIATE RELEASE
September 23, 2008

SENATE PASSES BAUCUS-GRASSLEY CLEAN ENERGY INCENTIVES,
EXTENSIONS OF EXPIRING TAX CUTS, DISASTER TAX RELIEF AND
PROTECTION FROM ALTERNATIVE MINIMUM TAX

Fiscally responsible tax package jump starts energy independence, garners bipartisan support to
address top tax issues for 110th Congress

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking
Member Chuck Grassley (R-Iowa) today won Senate passage, by an overwhelming vote of 93-2,
of legislation to carry out the remaining Finance Committee objectives for the year, including
passage of clean energy tax incentives, protection of millions of Americans from the alternative
minimum tax (AMT), and extensions of expiring family and business tax cuts. Today’s vote
replaced the current text of H.R. 6049, energy tax legislation approved in the House of
Representatives earlier this year. The Finance leaders combined key provisions of a bipartisan
energy bill they introduced at the beginning of the month with an agreement to update alternative
minimum tax rules and continue tax cuts for college tuition, state and local sales taxes, and
research and development for U.S. businesses.

“These tax measures represent real support for the American families, workers, and
businesses that need a break now. Businesses need provisions like the R&D tax credit to
innovate and grow, and families need the college tuition deduction and protection from the
AMT just to get by. This bill’s energy tax incentives will spark clean, homegrown sources
of power and thousands of good-paying jobs here at home, too,” said Baucus. “These tax
cuts for jobs, energy and families are coming not a moment too soon. I commend my
colleagues on their action today to pass this bill.”

“This is must-do legislation,” Grassley said. “The AMT relief prevents 24 million families
from facing an average tax increase of at least $2,000 each. We’re extending tax benefits
for middle-income taxpayers, including deductions for out-of-pocket expenses for teachers,
sales tax, and college tuition. Millions of taxpaying families would face an unexpected tax
increase if we don’t act. Businesses need continued job-creating incentives, like the
research and development tax credit. Congress should send a clear signal in support of
alternative energy and conservation. And we need to help the Midwest and the Gulf Coast
with disaster recovery, the sooner, the better.”

The bipartisan Senate agreement includes the following elements:

-- Clean energy tax incentives totaling approximately $18 billion, fully paid for by several offset
provisions including a delay of the tax deduction for domestic manufacturing activities of major
American oil and gas companies. Another offset provision tightens the rules by which oil and
gas companies pay taxes on income earned overseas, and makes general fund monies available with increased payments into the oil spill liability trust fund as new drilling is considered. The incentives are also funded in part by a one year extension of the Federal Unemployment Tax Act surtax at the current level, and by increasing reporting requirements for brokers on sales of stock.

-- An increase in the income threshold at which Americans become subject to the higher alternative minimum tax. This measure would protect more than 21 million taxpayers from higher taxes at a cost of $64 billion. The cost of the AMT “patch” is not offset.

--Extensions of expiring family and business tax cuts and other policies – including an expansion of the child tax credit, legislation providing parity for mental health treatment in the U.S. health care system, and tax relief for victims of natural disasters. Extensions of expiring tax cuts are partially offset by requiring hedge fund managers and others to account for deferred compensation – income held in offshore accounts and other corporate structures – as it accrues,
rather than avoiding appropriate and timely income taxes.

Detailed summaries of both amendments can be found in the printer-friendly version of this release.