Senate Passes Combined Financial Bailout/Tax Extenders Bill, 74-25

The Senate last night passed by a 74-25 vote a bill (now H.R. 1424, the Emergency Economic Stabilization Act) that combines the financial bailout bill that failed in the House with a bill that extends a variety of expiring tax cuts (formerly H.R. 6049 (Legislative Text; House Report; CRS Summary)).  The only change in the Senate's version of of the bailout bill is an increase in the Federal Depository Insurance Corporation's insurance limit from $100,000 to $250,000 per bank account. The White House announced that President Bush would sign the combined bill and urged quick action by the House. House Democratic leaders said they would bring the bailout/extenders bill to the floor on Friday but expressed disappointment that the Senate attached the tax extenders bill to the financial bailout bill.

The three tax provisions in the bailout portion of the bill would:

• Treat gain or loss from the sale or exchange of preferred stock by financial institutions as ordinary income or loss
• Impose special rules for tax treatment of executive compensation of employers participating in the Troubled Assets Relief Program (TARP)
• Exclude discharges of acquisition indebtedness on principal residences from gross income

The revenue offsets in the tax extenders portion of the bill would:

• Limit the deduction for income attributable to domestic production of oil and gas
• Eliminate the different treatment of foreign oil and gas extraction income and foreign oil-related income for foreign tax credit purposes
• Require broker reporting of customer’s basis in securities transactions
• Extend the 0.2% FUTA surtax
• Increase and extend the Oil Spill Liability Trust Fund tax
• Impose a new tax on the nonqualified deferred compensation from certain offshore tax indifferent parties

Documents:

• Legislative Text
• One-Page Summary
• Section-by-Section Analysis
• Joint Committee on Taxation Explanation of Tax Provisions of Bailout Bill (JCX-79-08)
• Joint Committee on Taxation Revenue Estimate of Tax Provisions of Bailout Bill (JCX-78-08)
• Senate Finance Committee Summary of Tax Proposals in Troubled Asset Relief Program
• Senate Finance Committee Summary of Energy Tax Provisions
• Senate Finance Committee Summary of Other Tax Provisions

Press and blogosphere coverage:

• ataxingmatter
• Bloomberg
• Cato Institute
• Don't Mess With Taxes
• Freedom Works
• Jack Bog's Blog
• L.A. Times
• New York Times
• The Hill
• Start Making Sense
• Tax Girl
• Wall Street Journal
• Washington Post