The Senate passed a far-reaching, $136 billion corporate tax package Monday that cuts taxes for businesses ranging from film companies to bow and arrow makers while closing tax loopholes and bringing U.S. exporters in line with international trade rules. The corporate tax bill grew out of the need for Congress to respond to a World Trade Organization (news - web sites) ruling that a $5 billion annual subsidy for U.S. exporters was illegal. As a result, 1,600 American exports to Europe are being hit by penalty tariffs that now stand at 12 percent and are rising by one percentage point a month. The bill became the vehicle for the most significant overhaul of corporate tax law in nearly two decades. It includes $76.5 billion in new tax relief for the manufacturing sector, which was broadly defined to include oil and gas producers, architectural and engineering firms and film and music companies. The package also provides benefits for a wide range of groups, from native Alaskan whalers, importers of Chinese ceiling fans, NASCAR race track owners and residents of states without state income taxes, who would be able to deduct state and local sales taxes from their federal tax returns. The measure includes a $10.1 billion buyout for tobacco farmers. Several senators from both parties objected strenuously that the final version of the bill drops Senate-approved language that would give the Food and Drug Administration (news - web sites) the power to regulate tobacco. Tax Breaks for the Corporate
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