Accord Near on Extension of Tax Cuts

WASHINGTON —  Republicans have reached agreement in principle on legislation to extend tax cuts on capital gains and stock dividends for two years and keep 15 million middle-income Americans from getting hit with a tax designed for the wealthy, GOP aides said late Tuesday.

However, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) is linking final passage of the measure to achieving an agreement with House Republicans over the outlines of a second package of tax breaks, according to Republican staffers, who spoke on condition of anonymity.

The agreement was reached among the Republican members of a joint House-Senate conference committee that was appointed to resolve differences between the two chambers on the tax legislation and came after President Bush summoned GOP leaders Tuesday for a strategy session.

Democrats contend the country can’t afford Bush’s tax cuts at a time of record budget deficits and spending on the Iraq war, and amid the escalating costs for Social Security and Medicare.

The tentative agreement would provide $70 billion in tax relief by extending for two years the 15% reduced tax rate on capital gains -- the profits from the sale of assets -- and dividends.