A package of important tax provisions in need of renewal this year, cosponsored by U.S. Senators Daniel Akaka and Daniel Inouye, was taken to the Senate floor by Finance Committee Ranking Member, U.S. Senator Max Baucus (D-MT) for immediate approval, yesterday and today. Despite the fact that the measure's provisions mirrored those in a bill previously supported by the majority, Senate Leadership blocked the request, twice.
The amendment sought to renew and extend measures such as the spousal travel deduction, the research and development credit, the college tuition deduction, the deduction available to teachers who spend their own money on classroom supplies, qualified zone academy bonds, and work opportunity and welfare-to-work tax credits. The spousal travel deduction was the same provision previously advocated by Representative Neil Abercrombie in the House.
"The majority in the Senate is holding hostage popular tax credits for businesses, teachers, those who hire welfare workers, working families, and other taxpaying citizens," Senator Akaka said. "It is unfortunate that they have chosen to not follow through on their previous commitment of support and would rather play politics with these important provisions."
The measures would have Hawaii-specific impacts. For example, according to the Internal Revenue Service, nearly 15,400 educators in Hawaii would be disadvantaged if the classroom supply deduction is not extended. Almost 17,200 students from Hawaii would be unable to take advantage of the tuition tax deduction. Representative Abercrombie has been working for 10 years to reinstate the spousal tax deduction that allows business travelers to deduct the full cost of meals, airplane tickets and lodging for family members who accompany them on business. Restoration of this deduction would provide a boost to Hawaii's travel industry.
"In addition to failing to extend widely-applicable tax provisions, inaction by the Senate majority will create unnecessary difficulties for taxpayers, preparers, and the IRS," said Senator Akaka. Senator Baucus, in his floor statement regarding the extenders package today, quoted the IRS as saying that the agency needs time to incorporate tax changes into forms for the 2006 tax year and giving a drop dead date of October 15th to receive such changes, or risk tax compliance problems or added confusion. "The Senate's target adjournment is October 6th, making a further delay in action on this package with about 50 separate items very worrisome for the next tax period," Akaka said.
