TAX NEWS - JUNE 2010

US Tax: Tax Bill, Financial Overhaul Talks Await Congress Next Week

by Corey Boles -- Senate Democrats will seek to move forward next week with a $116 billion bill that would raise taxes on large swathes of U.S. industry in order to extend federal benefit programs and a targeted package of tax credits.

The tax increases on many financial firms, multinationals and oil companies brings down the total cost of the legislation to around $56 billion over 10 years. It would see a jobless benefits program extended through November, and tax credits including a research and development measure and credits aimed at spurring growth in the renewable-energy sector.

The House passed the legislation last week before lawmakers broke for the Memorial Day recess.

The Senate could also hold a vote on a measure that would seek to impose limitations on the Environment Protection Agency's ability to regulate greenhouse gas emissions. The measure is backed by Republican Sen. Lisa Murkowski (R., Alaska), and is likely to have the backing of most Republican lawmakers and possibly some Democrats.

It only requires 51 votes to pass, not the 60 vote supermajority most measures need to be approved by the Senate. If lawmakers there do pass it, the resolution would still have to be voted in the House.

It is unclear what the House will initially turn to when lawmakers reconvene, although they must shortly deal with legislation to pay for the war in Afghanistan through the remaining four months of the current fiscal year.

Negotiations are likely to begin next week between House and Senate lawmakers seeking to finalize sweeping legislation overhauling the financial regulatory system. Both chambers have passed versions of the legislation, but they must now reconcile those bills.

Key stumbling blocks remain such as how to deal with the regulation of derivatives.

A crucial member of the Senate negotiating team won't likely return to Capitol Hill until Wednesday. Sen Blanche Lincoln (D., Ark.) is involved in a run-off in her state to see who will secure the Democratic nomination for her Senate seat in November's election.

Talks could also begin next week on how Congress should react to the ongoing oil spill crisis in the Gulf of Mexico. Lawmakers are mulling several potential legislative actions, including lifting the liability cap oil companies face for economic damages caused by oil spills and bolstering the regulation of the drilling industry.

Thursday, Senate Majority Leader Harry Reid (D., Nev.) said he wanted to pass legislation in response to the spill as part of a wider energy bill this summer.

Lawmakers will continue vetting Solicitor General Elena Kagan, President Barack Obama's second nominee to the Supreme Court. Kagan was nominated by the president last month to replace Associate Justice John Paul Stevens, who is retiring after more than 30 years on the high court.

The Judiciary Committee is set to begin formal consideration of her candidacy in the last week of June.