BILL WOULD GIVE KMART, KROGER BIG TAX CREDIT

DAVID GHITELMAN / with additional reporting by Kristi Ellis in Washington

WASHINGTON -- Kmart and Kroger could receive millions of dollars in tax refunds should the $100 billion economic stimulus package passed by the House of Representatives last week become law.

According to the Congressional Research Service here, a nonpartisan agency that provides research service to members of Congress, Kmart Corp., Troy, Mich., could receive $102 million in alternative minimum tax credits and Kroger Co., Cincinnati, could receive $9 million.

Both companies declined comment.

The alternative minimum tax requires businesses to pay a certain minimum corporate income tax, regardless of a company's financial results.

The measure passed by the House last week repeals the minimum tax, and gives refunds for payments dating back to 1986.

The CRS survey looked at the top 50 companies on the Fortune 500 list and found only seven that showed they would clearly benefit from the refund of minimum tax payments. The other five companies were General Motors, General Electric, Enron, IBM and USX. As a group, they stand to receive $3.3 billion in refunds.

However, the bill, which only narrowly passed the House by a vote of 216 to 214, will now go to the Democratic-controlled Senate, where major changes are likely before a final package is approved.

President Bush called on Republicans and Democrats in the House and Senate to come together behind a stimulus plan, but the House vote, which was generally along party lines, reflected the divisiveness in Congress.

"We want our consumers feeling confident," Bush said Wednesday in a speech to workers of a printing company in Glen Burnie, Md. "One way to feel confident is for people to know there's a strong homeland security initiative and strategy, that our country is doing everything we can to succeed. And there's nothing like boosting consumer confidence than a little extra money in the pocket, too."

The White House has suggested a stimulus bill of $65 billion to $75 billion over the next year.

Senate Republicans have already indicated they may scale back the House package and Senate Finance Committee Chairman Max Baucus (D-Mont.) broke off bipartisan discussions early last week and released a $70 billion plan that differs from the plan outlined by the White House.

The Baucus plan would include $35 billion in unemployment benefits and subsidies to pay health premiums and $35 billion in tax-related items. About $21 billion would be tax items that benefit businesses, while the rest would be rebate checks to workers who did not make enough to pay income taxes.

"He clearly has pared it down on the corporate tax side and directed a lot more to individual unemployment compensation," said Steve Pfister, senior vice president of government relations at the National Retail Federation.

Eventually, the Senate will pass a bill and the two legislatures will have to go to conference, where Bush will likely have to step in to guide the process.

There are tax-cut portions of the House bill, such as an accelerated 15-year depreciation of equipment and improvements like store renovations for those that lease, which Democrats also support. But among many tax provisions, Democrats oppose GOP calls for stepping up personal tax breaks to 2002 from 2004 for higher incomes and to speed up changes in capital gains taxation for long-term investments.

Despite the divisiveness, lawmakers and economists agree that the economy is in a recession and claim the stimulus package is needed for the economy to recover from the disastrous Sept. 11 terrorist attacks, which left consumers shaken.