The U.S. Senate today passed a substantial tax package that would bring fiscal relief to millions of folks across the nation. Wyoming Senators Craig Thomas and Mike Enzi (both R-Wyo.) voted in favor of the tax relief package. The bill passed 54-44.

“It’s clear to me that one of the main ways to help folks in their everyday lives is to give them more money in their pockets. The legislation makes it possible for people to invest in their communities, create jobs and make the economy grow. It’s fitting with my philosophy of pro-growth economics,” Thomas said.

“Our economy has seen more than 30 straight months of increased jobs and growth and legislation like we passed today is a big part of the reason why. This bill is another chapter in the book of sound economics,” Enzi said.

Senator Thomas, as a member of the Senate Finance Committee, authored two crucial provisions that were included in the legislation:

Industrial development bonds – tax-exempt state and local bonds used to finance private business manufacturing or acquisition of farm land or equipment are subject to limits on the amount of financing (i.e., the amount of the loan). The Jobs bill increased the limit to $20 million, but with a delayed effective date of September 30, 2009. The tax reconciliation bill will accelerate the effective date to bonds issued after December 31, 2006. This will be a boon to small business and economic development in Wyoming.

Eliminate the income limitation on conversion of traditional IRAs to Roth IRAs – Currently, if your AGI (adjusted gross income) is over a certain amount, you can’t consolidate retirement accounts by rolling over a traditional IRA into a Roth IRA. This is important because traditional IRAs contain pre-tax money, and Roth IRA contain money that has already been taxed. Conversion of a traditional IRA to a Roth IRA requires payment of income tax, since the earnings of a Roth IRA are not taxed.
The President is expected to sign the legislation into law soon.

Also included in the bill were the following components that would be helpful to thousands of folks across Wyoming:

Extension of increased (from $25k to $100k) expensing for small businesses (from 2003 tax bill) – This allows small businesses to invest in their businesses and immediately write off as a deduction those expenses up to $100k. The provision was scheduled to expire at the end of this year, and will now expire at the end of 2009.

Extension of reduced rates on capital gains and dividends (slated to expire after 2008) at 15 percent.

**Without this piece, 57,929 Wyoming families and individuals would see their dividend tax rates rise from as little as zero percent to as much as 35 percent after 2008.

**Without this portion, 47,164 Wyoming families and individuals would see their capital-gains tax rates rise from as little as zero percent to as much as 20 percent after 2008.

Alternative Minimum Tax (AMT) – The bill will exempt up to $62,550 of income for married couples and up to $42,500 otherwise from the alternative minimum tax through the end of 2006. The 2004 tax extenders bill exempted a smaller amount, expiring at the end of 2005. In Wyoming, 13,452 families and individuals would see an increase in their taxes without this provision.

This legislation is the first piece in a two-part effort to bring relevant tax relief to millions of Americans. The second piece will be brought up in the Senate in the near future. The President is expected to sign into law the first piece.