Bill Extends State Sales Tax Deduction for Tennesseans, Cuts Taxes for Tennessee Songwriters, Creates Historic Conservation Fund
Posted on December 9, 2006
WASHINGTON, D.C. – Early this morning Senator Lamar Alexander (R-TN) voted for the Tax Relief and Healthcare Act of 2006 – a comprehensive package of tax, health, trade, and energy provisions that extends the state and local sales tax deduction for Tennesseans, cuts taxes for Tennessee songwriters, provides funding for Tennessee hospitals, and creates a historic conservation fund. The bill passed the Senate by a vote of 79-9. “This package provides important tax relief for Tennesseans, including an extension of the state and local sales tax deduction and permanent tax fairness for our songwriters to allow them to continue paying the same capital gains tax rates that other businesses pay,” Alexander said. “It also includes an extension of the research and development tax credit that will help us keep our good jobs at home instead of seeing them move overseas, and creates a permanent conservation royalty that will fund the creation of athletic fields, parks, and open spaces in Tennessee and across the country. “I voted for this legislation because of its many benefits for Tennessee and the nation, but I regret that Congress did not do more to offset the cost of the bill,” Alexander added. “ I look forward to working with my colleagues from both parties next year to redouble our efforts to control spending and put our nation back on the path to a balanced budget.” Provisions of the Tax Extenders Act included: Two-year extension of the state and local sales tax deduction – over 532,000 Tennesseans received average deductions of $400 on their 2004 federal tax returns, totaling over $200 million in tax savings. Permanent tax relief for Nashville songwriters – allows songwriters to treat the sale of their song catalogs as capital gains instead of income, thereby dropping the tax rate from as high as 35% to the same 15% capital gains rate paid by other businesses. Allows new oil and gas drilling in the Gulf of Mexico with 12½ percent of the lease royalties to be set aside to create a permanent fund for the Land and Water Conservation Fund stateside grant program, which will benefit all 50 states. This effort was led by Sen. Alexander in the Senate. (Press release attached.) Includes $131 million in Fiscal Year 2007 for Tennessee hospitals - this provision will reestablish a Tennessee Medicaid disproportionate share provision (DSH) which provides funds to Tennessee hospitals that take care of a large number of lower-income and uninsured individuals. Prevents physician Medicare payment cuts of 5% for 2007 by freezing physician payments at the 2006 level. If physicians chose to report quality-of-care data, they will be eligible for an increase in reimbursements of 1.5% for July through December of 2007. Extends tax deduction for qualified tuition and related expenses – extends the provision allowing Tennessean families to deduct up to $4,000 in higher education tuition and other expenses to help families afford the cost of higher education. Extends tax deduction for certain expenses of elementary and secondary teachers – extends a provision that will help Tennessee teachers by allowing them to deduct up to $250 for school supplies that they pay for out of their own pocket. Provides a two-year extension of the research and development (R&D) tax credit – Encourages businesses to invest in cutting edge research by allowing them to claim a tax credit for new research conducted that year. Also encourages companies to locate research facilities here in the U.S. rather than abroad. The Tax Extenders Act has been approved by the House of Representatives and now goes to the President for his signature.