DIVIDEND CUT MOVES

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FYI: Both the House and Senate are advancing the White House’s proposal to eliminate income taxes on corporate dividends this week, as key GOP legislators move forward with bills that many moderate Republicans and almost all Democrats have vowed to block. Housing advocates fear eliminating the dividend tax will cripple the Low Income Housing Tax Credit by removing any incentive corporations have to purchase tax credits from housing agencies, which use profits from those sales to fund affordable housing development. Yesterday, the House Ways and Means Committee voted along party lines to sharply reduce, but not eliminate, dividend taxes. Senate Finance Committee Chair Charles Grassley, who tried and failed to broker a deal on the provision, will lead a vote on his bill tomorrow that would phase in an elimination of the tax over the next three years, then restore it in 2006. Democrats and key GOP moderates say the bill is a sham, as Congress never stops a tax cut program once it starts. [5/7/03]