In addition, Grassley said the Roth proposal does not include a repeal of the ethanol tax incentive, as did the tax package advanced by House Ways and Means Committee Chairman Bill Archer. The Finance Committee bill also provides for an increase in the estate tax exemption.
Grassley said the Senate proposal "is good news for family farmers and rural America." The bill reaffirms the intent of Congress that family farmers should be able to continue receiving the tax benefit provided from the use of the cash method of accounting and from installment sales for their deferred payment commodities contracts. "The IRS decision last fall on this issue was dead-wrong, and this bill sets the record straight," Grassley said.
In addition, Grassley applauded Chairman Roth for recognizing that "ethanol is good for farmers, good for the environment and key to reducing America's dependence on foreign oil. Just consider how many billions of tax dollars have been spent to keep our seaways open for petroleum fuel. The facts are on the side of ethanol," Grassley said. The U.S. Department of Agriculture has reported that "each gallon of ethanol produced domestically displaces seven gallons of imported petroleum." Grassley said ethanol reduces America's oil import bill by $4.7 billion annually, which is 10 percent of America's total trade deficit.
Introduced in January, Grassley's AMT bill has the bi-partisan support of 63 senators. The IRS already responded to Grassley's effort to reverse the agency's October 1996 decision when it granted a temporary reprieve for farmers who use deferred sales contracts by releasing a notice stating that taxpayers should make no changes to how they report sales deferred commodity and livestock contracts on 1996 income tax returns.
The bi-partisan legislation included in today's Finance Committee package to provide tax relief for individuals paying for higher education through student loans was introduced in April by Grassley and Sen. Carol Moseley-Braun of Illinois. The bill would let taxpayers who are paying off student loans claim an above-the-line tax deduction for five years for the amount of their loans. "By restoring the deduction on interest on student loans, Congress can send a signal that we value higher education and recognize the financial responsibility assumed by most students. We must help young people prepare to compete in a very competitive global economy," Grassley said.
The estate tax relief proposal included in the Chairman's mark is modeled after the comprehensive bi-partisan bill Grassley introduced in March. It includes Grassley's provision to exempt 100 percent of the first $1 million of qualified family-owned business assets inherited by family members who continue to operate the business. "This is an important measure to help keep these businesses in the family." However, as an advocate for relief from estate taxes for middle-income families who have been unfairly hit due to inflation, Grassley said the Roth proposal "does not increase rapidly enough" the unified credit exemption equivalent from $600,000 to $1 million. Grassley's measure would have reached this goal by 2002. The Chairman's proposal elongates the process until the year 2008. "The estate tax acts as a confiscatory tax on middle-income Americans, and delaying action to bring the exemption in line with inflation delays righting this wrong," Grassley said.
The Finance Committee is scheduled to meet throughout the week to amend and approve the Chairman's proposal. The legislation then must be considered by the full Senate and ultimately reconciled with the version approved by the House of Representatives before it can be sent to the White House for the President's signature. Grassley is the third most senior member of the Senate Finance Committee.