Congress close to deal to pay for tax breaks

May 15, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Congress finally is getting around to extending more than 50 popular tax breaks that expired at the end of last year, including money savers for homeowners, businesses and shoppers in states with no income tax. Lawmakers want to raise taxes on investment-fund managers to help cover the cost.

Legislation combining the tax breaks with more aid for people who have been unemployed for long stretches is expected to come up for a vote in the House next week. The bill would extend unemployment benefits for up to 99 weeks in many states and subsidize health- insurance premiums for laid-off workers through the end of the year.

Details are being worked out, but lawmakers also plan to expand a federal bond program that subsidizes local infrastructure projects, and to protect doctors from a scheduled 21 percent cut in Medicare payments.

The tax breaks would be retroactive to Jan. 1 but would again expire at the end of December. They include a property-tax deduction for people who don’t itemize, lucrative credits that help businesses finance research and develop new products, and a sales-tax deduction that mainly helps people in states without income taxes.

Delays in extending the tax breaks have left thousands of businesses unable to plan for their tax liabilities. Delays in passing a long-term extension of emergency unemployment benefits have forced thousands of laid-off workers to live month to month with no certainty of income. Unemployment benefits for many will start to run out June 2, unless Congress acts.

Congress routinely extends the tax breaks each year — the House and Senate already have passed competing versions for 2010. But lawmakers have been unable to agree on how to pay for them.