September 24, 2008 in Nation/World

Senate passes massive tax relief bill

Measure targets AMT, renewable energy
By JIM ABRAMS Associated Press
 

At a glance

Energy incentives

•Extends for one or two years and expands production tax credits for wind, refined coal, biomass and marine renewables.

•Extends through 2016 the investment tax credit for solar energy.

•Extends through 2016 the credit for residential solar property.

•Provides new tax credits for creation of advanced coal electricity projects and certain coal gasification projects.

•Establishes a new credit for plug-in electric vehicles.

•Extends credit for energy-efficient improvements to existing homes.

Alternative Minimum Tax

•Increases personal credits against the AMT, shielding more than 20 million taxpayers from the tax.

•Protects those exposed to the AMT because of incentive stock options.

WASHINGTON – The Senate passed a giant tax package Tuesday that saves more than 20 million taxpayers from the bite of the alternative minimum tax.

At a cost of more than $100 billion, the bill also nudges the nation toward greater use of alternative energy resources, renews popular tax breaks for businesses and individuals, and extends relief to disaster victims.

It includes a provision to ensure that mental health problems get the same level of insurance benefits as other medical treatment. The bill passed 93-2.

“The economy is struggling,” said Senate Finance Committee Chairman Max Baucus, D-Mont. “At times like these, Americans need tax cuts that they’ve come to count on, that can help them get by.”

The House was expected to take up the tax package today.

The alternative minimum tax was enacted in 1969 to catch a few very rich tax dodgers. But it was never adjusted for inflation and now Congress must act every year to ensure it doesn’t catch more people.

Without action, those affected could grow from about 4 million to 25 million, at an average tax increase of $2,000. The fix would cost $64 billion spread out over 10 years.

The first segment of the three-part tax bill was a $17 billion measure to spur investment and create jobs in the renewable energy industry. The energy legislation extends for eight years, through 2016, investment tax credits for the solar power industry and for homeowners who install solar and wind equipment.

Taxpayers can claim a credit of up to $7,500 for purchasing plug-in electric cars, and production credits are extended to wind, biomass and marine – waves and tide – facilities. There are incentives to use smart meters for more efficient home energy use.

A study commissioned by the Solar Energy Industries Association found that the eight-year extension would more than triple investment during that period, to $325 billion, and almost triple employment in the industry, to 440,000 in 2016.

Sen. Maria Cantwell, D-Wash., who helped put the energy package together, said the solar industry investment would provide power for more than 7 million people.

© Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email