Copyright 1999 The New York Times Company
The New
York Times
View Related Topics
November 17, 1999, Wednesday, Late Edition -
Final
SECTION: Section A; Page 20; Column
1; National Desk
LENGTH: 773 words
HEADLINE: Congress and Treasury Agree on Minor Tax
Breaks
BYLINE: By DAVID E. ROSENBAUM
DATELINE: WASHINGTON, Nov. 16
BODY:
The caboose on the legislative train this
year is likely to be a conglomeration of minor tax breaks that, among many other
items, would turn chicken droppings into a tax shelter, give Puerto Rico a
rebate for the tax paid on its rum and extend a pilot program of school
construction bonds.
The legislation's prospects are complicated by a
regional dispute over milk prices between lawmakers from the Northeast and those
from the Midwest. Negotiations between Congressional tax writers and the
Treasury Department were completed tonight. The chicken waste, rum and school
construction measures will be added to a must-pass bill to extend popular tax
breaks that have expired.
The bill could be part of the final omnibus
budget package or it could be considered as separate legislation after the
budget bill is completed.
The tax breaks that expired in September with
the end of the fiscal year and that would be extended include these:
*A
tax credit to help offset business expenses for research and experimentation.
*Authority for affluent parents who must pay the alternative minimum tax
to retain the $500 per child tax cut available to other parents.
*A
temporary tax cut for businesses that hire workers off welfare rolls.
*Authority for some American companies with foreign investments to delay
paying taxes on the proceeds until the money is returned to the United States.
Rather than make these popular tax breaks permanent law like most other
parts of the income tax code, lawmakers arrange for them to expire periodically.
That forces the beneficiaries, many of whom have deep pockets and make political
donations, to beseech Congress regularly to extend them. And it allows the
senators and representatives to claim a measure of credit when they are
reapproved.
The new tax credit for companies that convert the waste from
chicken coops into electricity also has a political dimension. It was added to
the bill at the insistence of Senator William V. Roth Jr. of Delaware, a
Republican who is chairman of the Finance Committee and who is involved in a
tough race for re-election.
The tax break has long been a dream on the
Delmarva Peninsula -- Delaware and the eastern shore of Maryland and Virginia --
where chicken farming is the largest agricultural enterprise and where producers
like Perdue Farms and Tyson Foods have big plants and hire thousands of workers.
Chicken droppings are now used for fertilizer, but all three states have
new laws that will eventually ban this because of the water pollution it causes.
So farmers and business have been searching for new ways to use the 800
tons of this waste produced on the peninsula every year. Burning it for
electricity is a possibility, but it is probably not practical economically
without a tax advantage.
The rum provision has been pushed by the New
York Congressional delegation, particularly Senator Daniel Patrick Moynihan and
Representative Charles B. Rangel of Manhattan, who have many constituents from
Puerto Rico. The measure would return to Puerto Rico and the U.S. Virgin
Islands, to spend as they want, the $13.50 in excise taxes collected on each
gallon of rum imported into the United States. Only $10.50 per gallon is now
returned. If all of it is returned, then it amounts to $44 million to Puerto
Rico and the U.S. Virgin Islands over five years.
The school
construction bonds were first approved as a pilot program for two years in 1997.
This was a part of President Clinton's education agenda, and he has persuaded
Congress to extend the program for another two years.
The dairy dispute
is not likely to derail the tax measure, but it could make the passage more
difficult.
Lawmakers from the Northeast want to prevent the Agriculture
Department from putting a new milk-price system into effect. They also want to
renew a price-fixing mechanism called the Northeast Dairy Compact, which puts a
floor on the price of fresh milk in the six New England states and which expired
with the end of the last fiscal year. They have persuaded Congressional leaders
to insert provisions to accomplish their goals into the final omnibus budget
package or into the tax bill if it is considered separately.
But
Midwestern lawmakers say their dairy farmers would be damaged by this measure.
Led by Herb Kohl, Democrat of Wisconsin, several Midwestern senators have vowed
to filibuster any bill that includes the dairy legislation.
The
Midwesterners apparently do not have the votes to sustain a filibuster
indefinitely. But they could tie up the Senate for days, and they hope to win
concessions from lawmakers who are eager to adjourn.
http://www.nytimes.com
LOAD-DATE: November 17,
1999 
