September 02, 2012
Senate Finance OKs business tax package
For once, House Republicans can’t complain that the Senate is dawdling on taxes.
After about three hours of debate, the Senate Finance Committee on Thursday cleared on a 19-5 vote a bipartisan package that would extend billions of dollars worth of business and individual tax breaks through 2013. Five of the 11 Republicans on the panel voted against the measure — Tom Coburn (Okla.), Jon Kyl (Ariz.), Mike Enzi (Wyo.), John Cornyn (Texas) and Richard Burr (N.C.).
The deal still has to be translated into legislative language but once that happens, it could head to the Senate floor soon after lawmakers return to Washington in September.
House Republicans, however, say they are taking a more comprehensive approach to taxes and aren’t likely to turn their attention to the hodgepodge of so-called extenders until after the election.
The Senate panel sifted through more than 100 amendments that addressed everything from a tax credit for the International House of Pancakes to a wind energy production break and the alternative minimum tax.
At a time when both parties in Congress say they want to move away from temporary tax policies to a more sustainable system, the package approved by the Senate panel amounts to yet another fiscal punt. But Senate Finance Chairman Max Baucus (D-Mont.) said the deal at least provides another year of certainty for businesses who take advantage of the breaks.
“Businesses need certainty so they can plan for the future,” he said. “They need to know how transactions will be taxed. They need to know what income will be taxed. Without this certainty, they are less able to know how much money they have to hire new worker or invest in new technology or machinery.”
A spokesman for Baucus said the chairman wants to address the long-term fate of the breaks as part of a broader tax code rewrite.
Republicans, meanwhile, claimed success in stopping the tradition of Congress continuing all of the tax breaks in the extenders package at the end of the year almost by default. Instead, both parties agreed to give up more than two dozen targeted tax breaks ranging from benefits for plug-in vehicles to writeoffs for business equipment purchases.
That alone is a breakthrough, said Utah Sen. Orrin Hatch, the top Republican on Finance.
“The tide is turning for the first time in my 21 years on the committee,” he said. “We are moving in the opposite direction.”
Still, the pruning only goes so far. In the course of one day, the measure’s cost ballooned by more than $53 billion.
The bulk of the growth stems from a decision to shield middle-class taxpayers from the alternative minimum tax for two years instead of the one year that Baucus and Hatch agreed to earlier this week.
The panel also agreed on Wednesday to add to the package a tax credit for wind energy production — a measure that Republican presidential hopeful Mitt Romney earlier this week said he opposed as an industry-specific handout.
Iowa Republican Sen. Chuck Grassley countered that it’s unfair to leave a break that benefits his farm state on the cutting room floor while other industry-centric provisions are allowed to go forward.
Meanwhile, before heading out of town on Thursday for the August recess the House passed 232-189 a bill that would make it procedurally easier to move tax reform legislation through the House next year.
The bill is being moved at the urging of freshman Republicans who are seeking a commitment from leadership that overhauling the tax code tax will be on the chamber’s agenda early next year.
Under the bill, it would be easier for an individual member to force a vote on a tax reform proposal that is reported out of the House Ways and Means Committee by April 30. A member could make a motion to vote on such a package, for instance, even if the Rules Committee has not acted to set up such a vote.
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