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Tax Breaks Run The Gamut In Bailout

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The Associated Press

Published: October 4, 2008

WASHINGTON - Millions of taxpayers, thousands of businesses, and groups as diverse as solar power developers and natural disaster victims will see tax relief with the House vote Friday to approve and send to the president a $700 billion bailout.

The tax relief package attached to the rescue bill promotes renewable energy development and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrow groups as motor sports racetrack owners, film producers and bicycle commuters.

The largest group of beneficiaries is about 20 million mainly upper-middle income taxpayers. Without congressional action, the alternative minimum tax would add some $2,000 this year to the tax bill of these people, most earning less than $200,000 a year.

The research and development tax credit extension would cost $19 billion over 10 years. The cost of the entire tax portion of the bill is close to $110 billion.

The renewable energy incentives include an eight-year extension of investment credits for solar energy, wind, geothermal and other alternative sources. The solar industry says extension of the credits would produce 440,000 jobs and more than $230 billion in investments.

The measure also has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy school supplies with their own money.

There are $3 billion in deductions for residents of states without income taxes that have state and local sales taxes, such as Florida. There are also about four dozen small provisions, with projected costs over 10 years:

• Puerto Rico and the Virgin Islands rebate against excise taxes on imported rum. Cost: $192 million.

• Tax credit from $2,500 to $7,500 for buyers of plug-in electric-drive vehicles. Cost: $758 million.

•Tax credits for economic development in American Samoa. Cost: $33 million.

•Credit for training mine rescue teams. Cost: $4 million.

•Extending a depreciation timetable for NASCAR and other motorsport racing facilities. Cost: $100 million.

•Reducing import duties on imported fibers and yarns used in worsted wool fabric. Cost: $148 million.

•Increasing the deduction to $20 million on film and TV productions in economically depressed areas. Cost: $478 million.

•Allowing commercial fishermen and other victims of the 1989 Exxon Valdez oil spill in Alaska to average out damage awards over three years. Cost: $49 million.

•Extending funding for rural schools and communities located on or next to federal lands. Cost: $3.3 billion.

•Exempting wooden practice arrows from a tax of 39 cents an arrow. Cost: $2 million.

•Exempting from tax benefits paid to workers who commute to work by bicycle. Cost: $2 million.

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