By MARY DALRYMPLE, AP Tax Writer
WASHINGTON (AP) - House and Senate tax writers struck agreement Wednesday on a $350 billion tax cut that Republicans leaders plan to pass by Memorial Day and that cuts President Bush's stimulus package in half.
Negotiators said they had the votes to pass the bill in the House and Senate this week, much less than the $726 billion Bush originally requested.
"We do have 50 votes," said Senate Majority Leader Bill First, R-Tenn.
The agreement combines roughly $330 billion in tax cuts with $20 billion in aid to states. House and Senate tax writers trimmed a $383 billion package assembled earlier in the day to $350 billion to win the crucial support of Republican George Voinovich of Ohio.
"If they stay within the 350, I'm fine," Voinovich (pictured, above) said. "I appreciate the fact that they've been trying to honor my concerns and make me an honest man."
Voinovich, who had worked with other moderates to limit the Senate's tax cut, spent the afternoon with Vice President Dick Cheney in the private hideaway office of House Ways and Means Committee Chairman Bill Thomas, R-Calif., to shrink the cost of the package.
The negotiators agreed to move up the expiration date of one of the bill's most expensive provisions, which cuts taxes on capital gains and dividends to 15 percent. The policy had been set to expire after 2009. It would now expire in 2007, 2008 or 2009, depending on analysis still under construction by congressional tax experts.
The deal includes $20 billion in state aid that other Senate moderates demanded.
The foundation of the bill remains similar to the versions passed in the House and Senate. It accelerates already scheduled cuts to income tax rates. Married couples would get a larger standard deduction, and parents could claim a $1,000 child tax credit until 2005, up from $600.
To encourage small business investment, small businesses could expense up to $100,000 in new equipment investments and companies could depreciate more of their assets.
The agreement includes none of the tax or fee increases that had been added to the Senate's tax cut. It also drops many of the tiny tax items for special interests inserted by individual lawmakers.
"It is crystal clear, totally clean tax policy," said a top aide to First.
Republicans, under pressure to complete the tax bill before Monday's holiday, must deliver an outline soon so the House and Senate have time to pass the bill this week. A senior congressional aide said that if not passed this week, the current outline could crumble and negotiations could begin from scratch in June.
Congressional leaders cannot afford to lose Republican support because most Democrats object to the size and structure of the tax and spending proposal.
"What we also know is that, in the long run, the bill will not cost $350 billion or $550 billion, but that it will really cost a trillion dollars or more -- and all of it is borrowed money which increases the national debt," said Rep. Charles Rangel, D-N.Y.