Jan. 22 (Bloomberg) -- Democrats in charge of the House Ways and Means Committee are poised to approve a $275 billion tax cut as part of the $825 billion economic stimulus bill sought by President Barack Obama.

The panel’s action today would send the tax plan, providing $500 in payroll tax cuts to individuals and $1,000 to families, to the full House. It will be merged with $358 billion in public- works spending that passed the House Appropriations Committee yesterday, plus another $192 billion in mandatory spending increases.

Democrats are moving for full congressional passage of the fiscal stimulus package by mid-February amid escalating job losses and a credit crunch that has been slow to ease. Representative Henry Waxman of California, chairman of the House Energy and Commerce Committee, said the full House may vote on the plan Jan. 27.

Representative Chris Van Hollen of Maryland, a Democrat on the Ways and Means committee, said the bill provides “tax relief where it is needed most: to cash-strapped families needing a little more breathing room in their budgets, businesses who will create the next wave of good-paying American jobs, renewable energy companies committed to transforming our energy sector, and states and localities charged with serving our citizenry.”

Republicans complain the bill won’t do enough to jump-start the economy. They are pressing for more tax relief, an appeal they plan to make in a meeting with Obama next week.

‘Hear Our Case’

“We will take our proposals directly to the president, who has agreed to sit down with us and to hear our case,” said Representative Dave Camp of Michigan, the top-ranking Ways and Means Republican. “The American people know we cannot spend our way to prosperity.”

Ways and Means Chairman Charles Rangel, a Democrat from New York, said he regretted that the panel wasn’t able to hold a hearing on the legislation before today’s drafting session. He and other Democratic leaders in Congress are focused on passing the stimulus measure quickly, and Rangel pledged to engage Republicans “in a bipartisan way” later in the year to consider broader changes to tax laws.

The $275 billion tax cut would be largely concentrated in the next two years. Its largest provision would give individuals and families about $145 billion in tax cuts by reducing payroll taxes withheld from paychecks for individuals who earn less than $75,000 a year and married couples who earn less than $150,000 annually.

Working Poor

The bill would expand tax credits for the working poor, making more families eligible for a child tax credit, and enhance tax provisions that subsidize college tuition.

The tax section would let businesses convert losses into cash by claiming a refund of taxes paid in previous years. Fannie Mae, Freddie Mac and companies that received aid from the Troubled Asset Relief Program wouldn’t be eligible for the tax break, according to a summary of the bill.

The three-dozen tax provisions would give businesses incentives to invest in equipment and remove a requirement that first-time homebuyers repay a special $7,500 tax credit enacted last year to stimulate the housing market.

Also in the bill are almost $20 billion in tax credits to subsidize producers of alternative energy, including a three-year extension of a tax credit for energy produced from sources such as solar, wind, and waste products.

Highway Construction

The larger spending package includes $358 billion for highway construction, school repairs, renewable energy programs and scores of other initiatives.

The Ways and Means panel, on a voice vote, rejected an amendment to make permanent the 15 percent tax rate on capital gains and dividends that is to expire on Dec. 31, 2010. The amendment also would have indexed the purchase price of assets to inflation for purposes of calculating gains and losses.

Also working today on the stimulus plan was the House Energy & Commerce Committee, which voted to add a $2.8 billion plan to expand broadband services. The provision would create a new grant program supervised by the National Telecommunications and Information Administration.

The program aims to spend 25 percent of the money in parts of the country in which broadband isn’t available, while 75 percent would go to areas deemed underserved.

Along with calling for more tax cuts in the bill, Republicans complain it would pump money into the economy long after the recession is projected to end.

‘Not Going to Work’

The stimulus is “not going to work,” said Representative Paul Ryan of Wisconsin, the top Republican on the House Budget Committee. “We have to do better than this. This bill is not worthy of our new president.”

The nonpartisan Congressional Budget Office said this week the government won’t be able to spend most of the plan’s $358 billion for discretionary programs until sometime after 2010.

House Speaker Nancy Pelosi said today the CBO “did not have the full data” for its report.

Still, Representative Jim Cooper, a Tennessee Democrat, said he is “worried” about the CBO analysis and joined Republicans in expressing concern the stimulus plan would take too long to boost the economy. He said he may not support it.

Delaying most of the spending until after 2010 “isn’t going to do us any good,” Cooper said. He said if the bill “wanders too far from what the president wants, I’m not on aboard -- this is not a Christmas tree.”

Asked what ought to be done about the package, Cooper said, “Teach the appropriators how to count.”

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net; Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: January 22, 2009 15:42 EST