Senate Tax-Extenders Bill Triggers Flood of Amendments

The Senate Finance Committee is marking up a measure that would renew 45 of 55 expired provisions in the tax code.

WASHINGTON, DC - JANUARY 06: U.S. Sen. Ron Wyden (D-OR) speaks to members of the press as he is on his way for a vote January 6, 2014 on Capitol Hill in Washington, DC. Janet Yellen was confirmed by the Senate with a vote of 56 - 26 to become the first woman to head the Federal Reserve Board.
National Journal
Billy House
April 2, 2014, 5:34 p.m.

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.”

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