Bigger Tax Package Coming Jude Wanniski September 22, 2004

A Senate-House conference committee meets this afternoon at 3:30 to wrap up work on the “tax extender” legislation that stalled before the GOP convention. Rumor has it that the bill may be juicier. Given the fact that so many of the middle-class tax cuts in the bill are popular on both sides of the aisle, it may have as many as 90 votes on final passage. The key was Senate Minority Leader Tom Daschle’s decision to signal that the conferees would not have to “pay for” the cuts with spending cuts or tax increases in other areas. Daschle is in a tough re-election race in South Dakota where his opponent has been hammering him for blocking legislation that would be popular in the state, which President Bush is expected to win easily. 

The latest twist is that the GOP leaders, Bill Thomas in the House and Chuck Grassley in the Senate, decided they have enough of a vote cushion to move tax cuts from the stalled corporate tax bill to the extender legislation. These include business tax breaks and the possibility of a provision to permit taxpayers to deduct sales taxes from income-tax liabilities. The reasoning by Thomas of Ways&Means seems to be that the corporate tax bill may not have the support of the Senate unless it is “paid for” by the projected savings that accrue from the elimination of the Foreign Sales Corp. There is a very slight chance that Thomas will be able to finally get a conference committee on the FSC, which has passed both houses, and whip it through before Congress breaks for the elections. In any case, it looks better that a corporate tax bill will be passed next week or in a lame-duck session after November 2.