Since early last year, Collins has been leading the fight in the Senate to provide fiscal relief to cash-strapped states. The $20 billion aid package, which will deliver half of the relief through increased Medicaid reimbursements this year and next, initially passed the Senate by an overwhelming vote of 95-3. However, because the House-passed growth package included no comparable provision, preserving the fiscal relief language through conference was difficult.
The provision means $116 million for the state of Maine over the next two years, which will help preserve health insurance coverage for low-income citizens and aid the state in closing its budget gap.
"I am very pleased that the final economic growth package will include $20 billion in temporary fiscal relief to help our states that remain awash in red ink," said Senator Collins. "This is good news for states, good news for working families who were facing state tax increases, and good news, especially, for our neediest Americans, for whom basic health care often would not be available without Medicaid."
Collins's amendment will help Maine avert cuts to the Medicaid program that would have left thousands of Maine citizens without any form of health insurance coverage.
"At least 1.7 million people are at risk of losing their health care coverage because of state cuts to Medicaid that have already taken effect or are looming on the horizon. These are some of our most vulnerable citizens and they need our help. That is why I am particularly pleased that the final tax bill retains our provision directing $10 billion to the Medicaid program," Collins said. Collins, a longtime small business champion, also praised the bill's small business expensing provisions, which allow businesses to immediately deduct significantly more of their investments in equipment and property. This provision was modeled after legislation Senator Collins first authored in 2001 to help stimulate the economy.
"The importance of small businesses to our economy can hardly be overstated. Time and again, small businesses lead the nation down avenues of new economic opportunity, and our expectations rise with each remarkable success story. We owe it to them to create a climate that nurtures and rewards entrepreneurship. This tax package does that, and help will soon be on the way to our nation's small businesses."
The legislation, which President Bush has said he hopes to sign by Memorial Day, includes the following provisions Senator Collins supports:
Marriage Penalty Relief Married couples who are in the 15% tax bracket will also receive relief from the "marriage penalty", providing over $35 billion in relief to these taxpayers. Increase in Child Tax Credit The Conference agreement accelerates the child tax credit from $600 to $1000 per child effective in 2003 and 2004. Eligible tax payers would receive an average tax cut of $623 each year as a result of this increase. For 2003, the increased amount of the child tax credit will be paid in advance to taxpayers who claimed a child tax credit on their 2002 tax return. Approximately 25 million families will receive checks totaling $14 billion, which will be sent out beginning in mid-July over a period of three weeks.
Expansion of the 10% Bracket Low-income taxpayers receive a lift through the expansion of the 10% bracket, which will now apply to single taxpayers earning less than $7,000, and married couples earning less than $14,000. Present law places many of these taxpayers in the 15% tax bracket. This provision of the tax bill will put $11.9 billion into the hands of low income taxpayers.
Reform of the Alternative Minimum Tax The bill also provides nearly $18 billion toward reforming the Alternative Minimum Tax, or "AMT". The AMT was originally designed to close loopholes sometimes used by wealthy taxpayers, but because it was not indexed for inflation, it has increasingly fallen on middle-class Americans. The bill increases the exemption for the AMT to $4,500 for singles and $9,000 for married couples.