Jim Angle at Fox News explains the tax provisions included in the financial markets bill are, in fact, non-controversial and provisions already passed in the Senate by a vote of 93-2. And the AMT fix. 

And that wooden arrow provision that’s drawn such critical attention?

ANGLE: The bill also extends things such as deductions for tuition expenses, allowing teachers to continue to deduct out-of-pocket expenses for their classrooms, and allowing taxpayers in states that have high sales taxes instead of state income taxes to deduct the sales tax instead. Some reports ridiculed a provision that exempts from taxes wooden arrows for children.

MCCRERY: The fact is that boy scouts and camps all over the United States use these wooden arrows for practice, for archery practice and so forth, and the instruction of archery.

ANGLE: The tax was intended for professional bows and arrows, not those used to teach boy scouts but an earlier effort to change the law inadvertently saddled 30-cent arrows for children with a 39-cent tax, thereby doubling the price, a mistake the extender package fixes.

MCCRERY: While some may look at this and say oh, that’s terrible, when in fact, it’s good tax policy.

Shorter version: It’s the Tax Extenders Bill.

The Senate convenes at 10 a.m. At National Review Online, a report from Senate staff:

The structure is this:

The Senate will call up H.R. 1424, the text of which will be substituted with the economic rescue plan (a Dodd amendment which must have the consent of both the Majority and Minority Leaders). The only other amendment in order will be a Sanders amendment that will be handled by a voice vote.

The bill will be subject to a 60-vote threshold for passage.

Another note from an aide: “it will be the economic rescue plan, plus the FDIC improvement, plus the tax relief extension bill that we passed earlier this month ($100 million in net tax relief that’s being stalled in the House).”

The Washington Post reports much the same.

From CQ, “House Sticks with Offsets for Tax Extenders“:

The House is drawing the boundaries of a tax fight with the Senate as it prepares to pass a $61.7 billion bill that shrinks the gap between the two chambers’ positions but leaves major unresolved differences.

The continued stalemate and the apparent lack of negotiations are worrying industry groups that depend on seeing their tax breaks extended. The dispute, over the extent to which Congress should offset the cost of extending expiring tax breaks, raises the possibility that many popular tax provisions will expire.

Bloomberg, “House delays vote on tax measure.”

WASHINGTON – The US House put off until at least today a vote on a tax measure that is different from a Senate-passed bill and could jeopardize enactment of solar energy tax breaks and other expiring incentives.

House Ways and Means chairman Charles Rangel urged the Senate to not miss the opportunity to make measure into law.

The White House Office of Management and Budget issued a statement warning of a veto by President Bush because the House measure raises taxes and separates an alternative minimum tax proposal in the Senate package from the main bill.

Senator Chuck Grassley’s metaphorical use of a Pink Floyd album cover Tuesday to make the case for tax extenders just struck our fancy, so here’s the Senator’s full remarks on the album and the refraction of light.

Most prisms are delicate. They are transitory. This one is no different. Our friends in the House need to see that. They can break this fragile prism. The shards will cut millions of taxpaying families.

The Senate just voted to pass the tax extenders bill, H.R. 6049, on a vote of 93-2. Rollcall votes here.

The bill is now the Baucus-Grassley substitute amendment, which includes tax provisions supported by the National Association of Manufacturers:

• A seamless extension of a strengthened R&D credit.
• An extension of deferral of U.S. tax on active business global financing income.
• An extension of the look-through rules for payments between related foreign corporations.

From Reuters:

WASHINGTON (Reuters) – The U.S. Senate on Tuesday approved a package to extend $18 billion in tax credits for using renewable energy sources like wind, solar and geothermal and also provide incentives to cut energy consumption.

Under the proposal, which will be part of a much bigger tax bill, the tax credit for producing electricity from wind would be extended for one year. The credit for other renewable sources, such as wave and ocean tide projects that generate power, would be extended for two years.

The residential and business tax breaks for solar energy would be extended for eight years.

Senate Majority Leader Reid described the bill as “half-offset” with added revenues — tax increases — which he hoped would be seen by House “pay-go” adherents as an acceptable compromise. Sen. Reid also emphasized the R&D tax credit was a two-year extension, rather than a single year. (Not permanent? Sigh. We’d also note that one of those years is the current one, going back to Jan. 1, 2008. But not to be churlish. It’s good, very good.)

AP story summarizes the entire legislation prior to passage.

Things you never thought you’d see on the Senate floor…

Sen. Grassley has just used a poster of Pink Floyd’s “Dark Side of the Moon” album cover to make a point about the tax extenders legislation, the nature of compromise and budget offsets.

The white light on the left side of the poster entering the prism is compromise. The multicolored beams are the various elements in the bill, including budget offsets. We must not break this prism into shards, Senator Grassley argues.

The Senator concludes: Use the prism that presents the opportunity to preserve tax relief for millions of middle-income families.

Which means this song must be used in news reports about today’s debate.

P.S. Perhaps it was in the way of a eulogy to keyboardist Richard Wright.

From the R&D Credit Coalition:

WASHINGTON, DC – June 3, 2008 – The Research & Experimentation (R&D) Credit, allowed to expire by the U.S. Congress on December 31, 2007, has spurred more than $6 billion in innovation-producing investments that have funded wages for high-skilled employees across more than 17,700 small and large companies in all 50 states, according to a new report by Ernst & Young LLP and released today by the R&D Credit Coalition.

In 2005, more than 70 percent of the qualifying research expenditures under the R&D Credit went to paying U.S. employee wages and salaries according to the report titled, “Supporting Innovation and Economic Growth.”

“The positive economic impact of the R&D Credit is wide and vast. The fact is that 70 percent of the benefit of this credit goes directly to pay American workers developing the products and markets of tomorrow,” said Monica McGuire, executive secretary of the R&D Credit Coalition. “For 25 years, the R&D Credit has helped to foster the domestic growth of highly-skilled jobs. The expiration of this key tool for American job growth is universally felt.”

  

The report, by Ernst & Young LLP, shows that 2,641 Texas companies reported R&D activity in 2005, the most recent year for which data was available, representing 5.7 percent of total U.S. R&D. California topped the list with 5,741 companies, while Massachusetts was third with 2,478 companies

We’ve put the state rankings in a separate .pdf page: rankings-of-states-business-rd. C’mon reporters, localize!