Senate Finance Chairman Max Baucus could introduce his tax extenders package as early as today — with offsets to be determined, sources on and off Capitol Hill said Wednesday.
How to pay for the roughly $55 billion bill would instead be decided when the Senate Finance Committee considers it, possibly later this month. The measure would extend a series of expired or expiring tax breaks, such as the research and development credit and renewable energy incentives that are considered top priorities of the business community and numerous lawmakers.
Under pay/go rules, the measure needs to be offset with commensurate revenue-raisers. The lack of a bipartisan agreement on how to pay for it spiked the extenders package last year, as Senate Finance ranking member Charles Grassley and other Republicans do not believe extensions of the law should require offsets.
And with the farm bill tax negotiations going down to the wire, Baucus did not want to endorse specific offsets at this time for an extenders package, which could take months to complete. “I think they are afraid of putting some raisers out there for fear they will end up in another bill,” said an industry lobbyist.
The House has not started the process for considering the extenders bill, which has become an annual ritual in Congress, along with a patch for the alternative minimum tax.
Baucus has said repeatedly this year there are no plans to offset the $70 billion cost of another one-year fix, as 60 votes would not be achievable under those circumstances.
The Senate version of the FY09 budget resolution leaves out any offsets for an AMT patch; however, it still assumes extensions of other expiring tax cuts would be paid for.
Coming up with offsets just for the extenders package could be difficult.
“Pay-fors” Baucus is said to be considering include delaying new rules going into effect next year allowing multinational firms to allocate their worldwide interest expenses across domestic and foreign assets.
The rules would lower multinationals’ tax bills by allowing them to maximize their foreign tax credits. Grassley is an architect of the new rules and opposes any delay, however, as does the White House.
Another offset is a Bush administration proposal to require investment brokers to report the cost-basis of securities transactions, but that provision is so popular it could get used for something else moving earlier.
House Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal, D-Mass., said how the Senate handles the offset issue could indicate how the House responds. Neal expressed concern about making House Democrats cast tough votes on fully-offset tax bills, if the Senate continues to jettison offsets.
“They’re against offsets over there,” he said. “Sooner or later it’s going to raise questions about the pay/go decision in the House, given what the Senate is doing.”