Senate Finance Committee Chairman Max Baucus (D-Mont.) told reporters Nov. 18 that he intends to offer several additional tax benefits to the stimulus package currently under consideration, including an extension of a bonus depreciation provision intended to encourage businesses to make new investments.

Baucus said the bonus depreciation provisions from the Economic Stimulus Act of 2008 (Pub. L. No. 110-185) expire at the end of the year and he believes the economic conditions warrant an extension of the tax benefit.

Baucus also said he intends to push for the inclusion of language that would suspend requirements for senior citizens to begin withdrawing money from their individual retirement accounts at age 70 1/2.

Baucus said he also plans to propose a suspension of new pension funding requirements set to go into effect under the Pension Protection Act. The law would require companies with underfunded pension plans to substantially increase their contributions to their pension funds. Baucus said much of the underfunding is the result of the stock market downturn, so asking companies to contribute more to their pension funds during the current economic conditions will only put further pressure on companies to cut jobs and other costs.

The only tax provision Senate Majority Leader Harry Reid (D-Nev.) has announced for the stimulus legislation to date is language from Sen. Barbara Mikulski (D-Md.) that would create an above-the-line deduction for state taxes and interest paid on new car purchases between Nov. 12, 2008, and the end of 2009 (222 DTR G-8, 11/18/08).

Health Care to Be Priority in 2009

Separately, Baucus also said a broad effort toward tax reform will not be attempted in 2009. Instead, Baucus said he and President-elect Obama intend to push forward on passage of a major health care reform, which he said would go a long way toward helping the economy over the long term.

"The sooner we address health care reform, the better for the economy," Baucus said. Baucus said there will be several tax-related proposals in the health care reform proposals. Some of the health care tax ideas floated during the presidential campaign by Sen. John McCain (R-Ariz.) will likely be incorporated into the package as a way to make it more acceptable to Senate Republicans, he added.

Baucus declined to offer specifics about which McCain proposals he would be willing to pursue, but said some of McCain's ideas to make it easier for small businesses to provide health insurance to their workers might be a good starting point.

During the presidential campaign, McCain suggested a $5,000 tax credit for health insurance for households as a way to help support small businesses seeking to offer insurance to their employees.

Baucus said he intends to meet Nov. 19 with Finance Committee Ranking Member Charles Grassley (R-Iowa) and Sens. Edward Kennedy (D-Mass.) and Michael Enzi (R-Wyo.)--the chairman and ranking member of the Senate Health, Education, Labor, and Pensions Committee, respectively, to discuss plans for the health reform effort.