Bill Extends Tax Breaks, Normalizes Vietnam Trade Relations

President Bush today signed a $40 billion bill that extends several popular tax breaks for individuals and businesses, normalizes the United States' trade relations with Vietnam and extends trade benefits with many developing nations.

The tax provisions of the bill, which affect IRS returns for 2006, include special deductions for higher-education tuition and fees and a $250 deduction for teachers reaching into their own pockets to buy classroom supplies.

The bill also gives taxpayers the option of deducting sales taxes instead of state and local income taxes, raises contribution limits and increases the flexibility of health savings accounts and offers energy conservation incentives to homeowners and businesses.

Bush, at a White House signing ceremony, said the bill's provisions extend "tax relief to millions of American families and small businesses and add momentum to a growing economy . . . This is a good piece of pro-growth legislation."

The Tax Relief And Health Care Act of 2006 also offers tax credits to businesses rebuilding Gulf Coast communities devastated by the 2005 hurricanes.

"It's in our interest that the people of the Gulf Coast recover as quickly as possible," Bush said.

On a global front, the bill extends duty free status to exports from four Andean nations, sub-Saharan African countries and Haiti.

"By encouraging exports, we're going to help [these] nations . . . develop their economies and ultimately create new markets for U.S. goods and services," Bush said. "It's in our interests to help those who struggle."

Normalizing trade relations with Vietnam eliminates a U.S. requirement that trade with the communist nation be reviewed every year. The provision in the tax and trade bill was controversial because some lawmakers were critical of Vietnam's human rights record. The Bush administration supported normalizing trade ties.

"Vietnam will join the World Trade Organization in January. Isn't that amazing? I think it is," Bush said today.

The bill will "help the Vietnamese people build a strong economy that's going to raise their standards of living," Bush added. "It's in the interest of the United States to promote prosperity around the world, and the best way to do so is through opening up markets and free and fair trade."

The tax and trade bill was passed by the House and Senate earlier this month in the final hours of the rancorous 109th Congress. Debate over the bill centered on the fiscal stewardship of a Republican Congress that saw record budget surpluses turn into record deficits. Some Republicans held up passage because the bill's price tag would void deficit-control measures.

Bush also signed a bill today that overhauls the Postal Service's business operations for the first time in several decades. The legislation calls for changes in how postal rate increases are calculated and employee pensions are paid, among other provisions.