Rangel Introduces New Tax Bill, Seeks Incentives for Green Energy

House Ways and Means Committee chairman Charles Rangel, D-N.Y., yesterday introduced another bill containing tax incentives for renewable energy and extensions of expiring tax breaks. Meanwhile, House members Wednesday night signed off on separate bills that would create a one-year "patch" to the alternative minimum tax and a new federal program that would authorize up to $13 billion of private-activity bonds to finance disaster relief.

The House began debate on Rangel's new extenders bill yesterday afternoon, and was poised to vote on it last night. However, it is unclear if this new bill - the second one he has introduced this week - has been modified enough to gain Senate approval, so that the tax breaks would be extended before Congress closes up shop for the year.

While the latest bill shares many similar provisions to this week's earlier one, it extends most of the expiring tax breaks for two years instead of a single year. The extended renewal is an attempt to more closely mirror the Senate package, which also contained two-year extensions, in order to garner Senate support for the House bill.

"The Senate said they wanted two years; this bill gives them two years, paid for by offsets they have already blessed," Rangel said in a statement.

However, Rangel stuck to his guns on requiring the extenders bill to be fully offset with revenue-raising provisions, whereas the Senate was only able to pass a partially offset extenders package. Senate Majority Leader Harry Reid, D-Nev., warned House lawmakers earlier this week that he would not be able to muster the votes needed to pass a bill modified from the Senate's package.

House Republicans were attempting to block Rangel's bill and bring forward the Senate measure yesterday, but those efforts were expected to fail along party lines.

Rangel's extenders bill, like the one approved by the Senate, would authorize $400 million in qualified zone academy bonds in each of 2008 and 2009, and also would extend the qualified green building and sustainable design project bond program through the end of 2012. But a provision that would restructure the New York Liberty Zone program and allow tax credits to help finance a rail link did not survive and was left out of the second version.

The House and Senate each approved legislation to provide a one-year patch to the AMT without revenue-raising offsets. The Bush administration threw its support behind the legislation yesterday.

The AMT, which applies to interest earned on private-activity bonds and some governmental and 501(c)(3) bonds, was created to prevent high-income households eligible for several tax breaks from paying little or no taxes. However, the AMT is not indexed to inflation, so more taxpayers become subject to it each year.

The House also passed a federal disaster tax relief bill late Wednesday that would expand the reach of mortgage revenue bonds in cases of federally declared disasters. It would also give the Treasury secretary the power to authorize state and local issuance of an additional $13 billion of private-activity bonds to finance the replacement, repair, reconstruction, or renovation of businesses damaged or destroyed as a result of a federally declared disaster, allocated to areas of greatest need first.

The Senate passed a narrower disaster package specifically targeted at providing relief to Midwestern flooding victims and to victims in Texas and Louisiana of Hurricane Ike. Under the Senate package, the Texas counties of Brazoria, Chambers, Galveston, Jefferson and Orange, as well as Calcasieu and Cameron parishes in Louisiana, could issue a special category of qualified private-activity bonds, which would not be subject to the AMT, in amounts up to $2,000 times their population. According to 2007 census figures for the counties, that would amount to roughly $2.3 billion of bonds.

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