Tax break package advances

WASHINGTON -- The House passed a $54 billion tax package Wednesday that Democratic backers said would help relieve dependence on imported oil while easing the economic strain on parents, homeowners and businesses.

The legislation passed 263-160, sending it to the Senate and an uncertain future. Most Republicans opposed the bill because it is paid for by requiring some corporations with offshore offices to pay more taxes and because it does not address shielding taxpayers from the alternative minimum tax.

The Bush administration, citing the two factors, threatened a presidential veto.

The measure renews dozens of tax breaks that have expired or will expire soon and provides new tax relief by expanding for a year the refundable child tax credit available to lower income families. The bill allows, for one year, a new deduction of property taxes for non-itemizers, worth up to $700 for a couple.

"It would cut taxes for millions of middle-income families," said House Speaker Nancy Pelosi, D-Calif.

She said that 30 million homeowners would benefit from the property tax credit, that the refundable tax credit would help the parents of 13 million children and that renewal of a deduction for tuition and other education costs would benefit 4.5 million families. An additional 11 million would be affected by extending current deductions for state and local sales taxes, she said.

The measure extends deductions for the out-of-pocket expenses of teachers and allows tax-free deductions from individual retirement accounts.

The measure provides some $17 billion in tax incentives for renewable energy sources such as wind and solar power, carbon capture and sequestration projects, plug-in cars and technology for green buildings. The bill provides $8.8 billion over 10 years to renew the research and development tax credit.

The bill, said Ways and Means Committee Chairman Charles Rangel, D-N.Y., would reverse the trend of the nation's "addiction to oil and the lack of will to do anything about it."

The Republicans' main protests were over the $54 billion in offsets, new sources of money to pay for the bill. One would close a loophole allowing hedge fund managers and others working for offshore corporations to defer tax on their compensation, and another would delay a tax break for multinational corporations operating overseas.