Opposition Softens on Corporate Tax Bill

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After once expressing serious misgivings, the Bush administration has fallen silent on a major corporate tax bill steaming through Congress, effectively giving the green light to legislation that critics say will complicate the business tax code while doling out billions of dollars in tax breaks to special interests.

The House Ways and Means Committee today plans to draft its latest version of the bill, which would repeal an export subsidy ruled illegal by the World Trade Organization and replace it with a bevy of business tax breaks to ease the pain of the repeal. A similar measure passed the Senate in May.

But what started as an effort to repeal a $5 billion-a-year subsidy has grown into one of the most significant corporate tax measures in years. The Senate bill, 980 pages long, includes more than $167 billion in business tax cuts over 10 years, handing out favors to NASCAR racetracks, foreign dog-race gamblers, Oldsmobile dealers and bow-and-arrow makers, to name a few. The centerpiece is a tax credit to effectively lower the tax rate on domestic manufacturing from 35 percent to 32 percent.

The House version, with $143 billion in benefits over a decade, has a similar centerpiece. But it includes provisions not in the Senate bill, from a $9.6 billion buyout for tobacco growers to a two-year, $3.6 billion measure allowing residents of states with no income tax to deduct state and local sales taxes from their federal income tax. Other provisions grant a $148 million tax break for bank directors, and would single out for help timber owners, human clinical drug trials, bow-and-arrow makers, tackle box companies, and sonar fish finders. Alcohol distillers won two provisions worth $428 million over the next decade.

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