WASHINGTON-The tire industry likes the economic stimulus package the House of Representatives passed Oct. 24, but isn't sanguine about the chances of all the House's tax break provisions making it through the Democratic-controlled Senate.
Passed by the narrowest possible margin-216-214-on Oct. 24, the stimulus package offers tax and spending incentives worth $99.5 billion in fiscal year 2002 and $159 billion over 10 years for businesses and individuals. Among other things, it would:
* Repeal the alternative minimum tax for corporations, and make that tax refundable back to 1986;
* Accelerate the 25-percent marginal tax rate passed in the tax cut bill from earlier this year, so that it will take effect in 2002 instead of 2006;
* Simplify capital gains taxes for assets held more than one year; and
* Allow for 30-percent expensing of certain business capital expenses.
A Democratic alternative, which concentrated less on tax cuts than on aid to workers laid off in the aftermath of the Sept. 11 terrorist attacks, went down to defeat on a 166-261 vote.
The partisan anger that accompanied House debate on the bill virtually guarantees that the Senate version will be less favorable to business than the House package. Complicating matters further is that President Bush plans to introduce his own priorities into the eventual House/Senate conference on the bill.
The Tire Association of North America, the International Tire & Rubber Association and the Rubber Manufacturers Association all support the House stimulus package. Roy E. Littlefield III, government relations director for ITRA, and an RMA spokesman mentioned that their associations belong to a coalition that supports tax relief for business.
Becky MacDicken, TANA director of government affairs, said her association particularly likes the increased expensing provisions and new depreciation rules in the package. ``Those will help anyone who needs to buy new equipment,'' she said.
But Ms. MacDicken was not hopeful that those provisions would survive unchanged in the Senate. She noted that Senate Finance Committee Chairman Max Baucus, D-Mont., has put forward a stimulus package that Sen. Charles Grassley, R-Iowa, ranking Republican on the committee, has refused to endorse.
``What sort of compromise we're going to get is just too difficult to say,'' she said.
Mr. Littlefield also was gloomy about the chances for the House package. ``The economic stimulus we would like to see is more money for highways,'' he said, although he added that all domestic issues except for the economic stimulus package have been ``pushed to the back burner.''
The RMA spokesman said his group supports ``any measure that helps business investment, particularly in a time of economic downturn.'' There is ``a general consensus'' in Congress, he added, that some sort of economic stimulus is needed, and he predicted that Congress would not adjourn for the year without passing a bill containing ``a significant portion'' of the tax breaks approved by the House.