Senate Passes $350 Billion Tax Cut

The Senate passed a $350 billion tax-cut package that includes limited dividend relief that backers hope will become permanent. The measure now must be reconciled with a substantially different House version.

On a 51-to-49 vote, the Senate passed a bill that would exclude half of the income from stock dividends from taxes, then eliminate taxes on dividends completely from 2004 through 2006. The taxes would be reinstated in 2007.

By contrast, the House's $550 billion package would reduce the tax rate on dividends and capital gains. A conference committee will begin to resolve the two bills' differences next week, a process that could go well into next month.

The Senate bill also includes family and individual tax breaks and a small-business investment incentive, and gives U.S. multinational companies a year to repatriate profits from abroad at a reduced tax rate of 5.25%, instead of the current 35% rate.

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