Congress Extends Some Popular Tax Cuts Through 2006 | AccountingWEB

Congress Extends Some Popular Tax Cuts Through 2006

House and Senate lawmakers on Wednesday agreed to extend three of President Bush’s popular tax cuts for wage earners, parents and married couples.

Congressional aides told the Associated Press that negotiators from the House and Senate agreed to keep the cuts in place through 2006, rather than 2009 as the White House requested.

Sen. Max Baucus of Montana, the top Democrat on the Senate’s tax-witing committee, said the White House is opposed to a two-year extension. A group of Senate Democrats and moderate Republicans, however, have suggested an extension as short as one year.

The extensions would cover increasing the child tax credit to $1,000, increasing the bottom 10 percent income tax bracket and lowering taxes for some married couples. The agreement would also freeze the alternative minimum tax in place for a year. The tax cuts were set to expire at the end of this year.

Aides said the congressional negotiators did not agree to a suggestion to prevent the tax cuts from increasing the federal budget deficit. One idea was to offset the costs of the tax cuts by closing loopholes and tax shelters.

Negotiators did accept other suggestions offered by the moderate senators, including changes that make the child tax credit more generous to low-income and military families. Also, the five definitions of "child" in the tax code were replaced with one definition.

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