GOP reaches agreement on extending tax cuts

WASHINGTON (AP) -- Majority Republicans have reached agreement in principle on legislation to extend tax cuts on capital gains and dividends for two years and keep 15 million middle income taxpayers from getting hit with a tax designed for the wealthy, GOP aides said late Tuesday.
However, final passage of the measure is being linked by Senate Finance Committee Chairman Charles Grassley to achieving an agreement with House Republicans over the outlines of a second package of tax breaks, according to Republican staffers who spoke on condition of anonymity because the deal has not yet been announced by their bosses.
These aides said they expected the disputes on the contents of the second bill to be resolved quickly so that the legislation extending tax breaks for capital gains and dividends can win quick approval by the full House and Senate.
But that prediction could prove too optimistic, given the struggle lawmakers have already faced in trying to resolve differences in the approach the two chambers have taken to tax cuts.
House Ways and Means Committee Chairman William Thomas has objected to linking the two measures, House aides said, but Grassley, who is serving as the chairman of the House-Senate conference committee handling the tax bill, believes it is important to work out the outline of the second tax bill now, Republican Senate aides said.
The tentative agreement on the first bill would provide $70 billion in tax relief by extending for two years the 15 percent reduced tax rate on capital gains, the profits from the sale of assets, and on the payment of stock dividends.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.