House GOP Introduces Tax Measure

People could deduct state sales or income taxes from their federal income tax under wide-ranging legislation revising corporate levies that House Republicans introduced yesterday.

The core of the $34 billion, 10-year measure is a revamping of corporate tax laws in an effort to end tariffs that European countries have placed on U.S. goods in a trade dispute.

People can currently deduct state income taxes, but not sales taxes, from their federal taxes. But for 2004 and 2005 -- at a cost to the U.S. Treasury of $3.6 billion -- the bill would let taxpayers deduct whichever local levy is higher.

That could help residents everywhere but would be most beneficial in Florida, Nevada, South Dakota, Texas, Washington and Wyoming, which have sales taxes but no income taxes. In addition, Tennesseans pay a sales tax but owe state income taxes only on the dividends and interest they earn.

The Ways and Means Committee plans to vote on the legislation next week, with debate by the full House a week later. The Senate approved a $170 billion version of the bill last month. It lacked the provision on state sales taxes.

Both bills would repeal a tax break on U.S. exports that the World Trade Organization ruled was an illegal trade subsidy. In response, the European Union has imposed gradually rising tariffs -- which hit 8 percent on June 1 -- on some U.S. goods.

To replace the repealed tax provisions, the House bill would permanently reduce the corporate tax rate from 35 percent to 32 percent for manufacturers and some small corporations.

GAO Faults Wildfire Funds Allocation

The U.S. Forest Service and Interior Department's practice of shifting money from other programs to pay for fighting wildfires has led to "widespread" problems and hurt the government's fire prevention efforts, a congressional report says.

The General Accounting Office, the investigative arm of Congress, said a chronic funding shortage has forced the Forest Service and Interior to cancel or delay some forest-thinning projects and equipment purchases. It has also "strained" relationships with other federal and state agencies.

In the past five years, the Forest Service and Interior have transferred about $3 billion from other accounts to fight wildfires.

States Want TVA Pollution Reduced

Seven states in the Northeast and the Midwest asked President Bush to force the Tennessee Valley Authority to reduce air pollution from its coal-burning power plants. The attorneys general of New York, Connecticut, Illinois, Massachusetts, New Jersey, Rhode Island and Vermont complained in a letter that pollution from 11 plants in the Southeast is drifting into their states.

The White House is reviewing the letter, said Dana Perino, spokeswoman for the Bush administration's Council on Environmental Quality.

-- From News Services