Senate Tries Moving Tax Extenders Package Before Election
The fiscal slope has several component parts, but one of the more overlooked ones is the series of what is colloquially known as “tax extenders,” those one-year tax breaks, usually for businesses, that are habitually extended. There’s a very good reason that these are only extended one year at a time – if you want to squeeze more campaign contributions out of business types, you have to show return on investment, and extending a tax break that saves their company millions every year – complete with the warnings that “without me as your champion in Congress, we may not be able to get this done” – does the trick.
So it’s in a way not surprising that, of all the fiscal slope pieces most likely to get wrapped up before the election, the tax extenders are most prominent:
Top Senate Democrats and Republicans have launched an effort to renew tens of billions of dollars in business tax breaks, which could send a signal to financial markets that the two parties can find some common ground ahead of the looming fiscal cliff facing Washington at year’s end.
At a closed-door Senate Finance Committee meeting this week, Chairman Max Baucus (D-Mont.) implored members on both sides of his tax-writing panel to help advance a pre-Election Day package covering an array of business tax breaks known as “tax extenders,” which could cost up to $35 billion depending on the scope of the plan. But Baucus’s pitch came with a catch: Lawmakers need to keep the expiring Bush tax cuts, the so-called Buffett rule and other politically charged issues out of the debate.
Some of these tax extenders are actually good ideas: there are credits for alternative energy production like wind power, and commuter tax credits that give a boost to mass transit. Others are simply giveaways to industry, like fossil fuel subsidies and ethanol credits. Like everything else, the rubber will meet the road on offsets. Traditionally these have just added on to the deficit. Baucus questioned whether to offset the one-year $35 billion cost in a Senate Finance Committee session on Tuesday. Republicans are split, but are likely to use the tax extenders to try to permanently extend the Bush tax cuts. The goal of Baucus and Hatch is to keep the Bush tax cuts and the other fiscal slope provisions out of the debate and find a solution that can get broad support. That’s probably a tall order, given all the tension over the tax code and the calls for an overhaul.
There is a lesson here to be learned about who matters in Washington. Income tax rate questions will get delayed, as will any domestic spending that provides services to the vulnerable. But tax extenders for corporations? Congress will get right on that.