In it, but not of it. TPM DC

Shocker: Business Lobby Wants Another Tax Cut in the Stimulus

The second half of this Journal article explains the COI tax break well. Essentially, any company buying up its own outstanding debt at a discount price -- which usually means a private equity firm that has taken over a struggling corporation -- the purchaser of debt has to pay taxes on the amount of debt it forgives. If I buy up your $100 debt at a discount of $40, leaving you on the hook to me for $60, the cancelled $40 of debt is still taxable.

The Chamber of Commerce, and 35 other trade associations in the home building and retail sectors, are seeking a COI waiver that would allow cancelled debt to be tax-free. As the Journal notes, the casino company Harrah's has taken up the matter with Nevada's two senators, John Ensign (R) -- a member of the powerful Finance Committee who already backs the COI waiver -- and Majority Leader Harry Reid (D).

Five bucks says the COI waiver makes it into the Senate's version of the stimulus bill when that emerges this week ...