Senate tax writers face a political-messaging and amendment blitz from colleagues and special interests as they head into a Thursday meeting to consider renewals for dozens of tax breaks, credits, and write-offs that lapsed on Dec. 31.
New Finance Committee Chairman Ron Wyden this week proposed to extend for another two years 45 of the 55 expired provisions in the tax code for businesses and individuals, and his panel plans to hold a markup on the measure Thursday morning.
But on Wednesday afternoon, the committee announced that it had received 92 requests for amendments from members seeking to revise the bill.
Among the provisions not making the cut in Wyden’s two-year extender language — worked out with Finance ranking member Orrin Hatch — are write-offs for NASCAR and other race-car tracks, a tax credit for wind energy production, and special “expensing rules” for the TV and film industries. Also chopped was a rule that corporations use to sidestep income tax on transfers of capital among offshore affiliates.
In addition to leaving out some favored tax incentives, some breaks that Wyden and Hatch propose for renewal would be modified. For example, an individual income-tax credit for “highway-capable plug-in motorcycles” would be extended for two years. But that provision is written to no longer include three-wheel vehicles such as golf carts.
Overall, the package as proposed would extend more provisions than it would leave behind. Without any changes, it would cost an estimated $67.3 billion over 10 years.
Provisions to be extended for two years include federal rum rebates to Puerto Rico and the Virgin Islands; a general sales-tax deduction that mainly benefits those in states without an income tax like Florida and Texas; and rules allowing owners of racehorses to depreciate those investments over a three-year cost-recovery period.
Also included are extensions of deductions related to corporate research and development, giving to public charities, expenses by teachers for books and other nonathletic supplies, special tax treatment for military basic housing allowance, and credit for certain railroad expenditures made to maintain tracks.
These “temporary” provisions have over the years been almost routinely renewed, often on a retroactive basis. But they also are seen by some as a failing of Congress to address tough choices as part of a permanent tax-code reform.
Renewal of most of these items is likely to occur again this year — though Republicans in the House led by retiring Ways and Means Committee Chairman Dave Camp have promised a stricter “policy-by-policy” review.
Indications are that action on a bill in the House could be put off until after the November elections, perhaps in a lame-duck session. It could be one of Camp’s last acts as a chairman who tried, but failed, to get action on a tax-code overhaul.
Meanwhile, Wyden is declaring on his side of the Capitol that this will be the last such extender package to be enacted under his watch as chairman; the Oregon Democrat says it’s time Congress focused less on keeping the status quo and more on actually revamping the nation’s tax code.
Hatch also believes the process needs to be changed. “This pared-back bill demonstrates to the American people that Congress can and will make the tough decisions needed to help clean up our broken tax code,” the Utah Republican said in a statement this week.
But such declarations could be significantly challenged Thursday, based on the list of amendments announced Wednesday by the committee.
Some of those amendments seek to renew previous tax breaks that did not make it onto the Wyden-Hatch list, such as an amendment seeking to extend the so-called NASCAR tax credit for seven years. It is cosponsored by Sens. Debbie Stabenow, D-Mich., Richard Burr, R-N.C., Bill Nelson, D-Fla., and Mark Warner, D-Va.
Other amendments seek to eliminate provisions that Wyden and Hatch propose for renewal, or others that are on the books — including one dubbed the “Eliminate Crony Capitalist Energy Tax Credits” offered by Sen. Pat Toomey, R-Pa.
Some amendments seek to make previously “temporary” tax breaks permanent. Still others propose to attach unrelated items to the extenders bill, such as one offered by Sen. Maria Cantwell, D-Wash., that would provide disaster aid to people in her state impacted by the recent mud slide. Toomey also offers an amendment to “protect bald eagles from wind turbines.”
The amendment activity is evidence of the intense lobbying and sometimes acute special-interest sensitivities facing lawmakers regarding these breaks.
One left-leaning group, Americans for Tax Fairness, issued a report earlier this week saying its research shows 1,269 lobbyists representing 373 companies and trade associations have reported lobbying on the broad topic of “tax extenders.”
The group’s executive director, Frank Clemente, praised Wyden for such moves as not including the so-called CFC look-through rule,” which has allowed corporations to defer otherwise taxable income through use of foreign entities. But he also predicted in a statement Wednesday that the Wyden-Hatch package will grow larger and more costly during Thursday’s markup.
Clemente said it is “troubling how quickly senators appear to be able to work out a deal on tax extenders that are unpaid for and largely benefit corporations while spending months crafting an emergency unemployment-benefits package that is paid for by cutting other spending.”