Senate Finance Committee passes tax extenders bill praised mostly for being bipartisan
posted at 2:41 pm on August 3, 2012 by Dustin Siggins
On Thursday, the Senate Finance Committee voted 19-5 to send a bipartisan tax extender package to the Senate floor. Unfortunately, as is typical, “bipartisan” is not necessarily a synonym for “good legislation.” Back in mid-June, I wrote about some of these special-interest tax extenders:
When it comes to tax reform, the American people face a number roughly around the $434 billion mark in increased taxation if all current tax policies arrive as current law indicates. This includes the elimination of the Bush tax cuts. While the special-interest tax credits are certainly being discussed as part of negotiations related to the Bush tax cuts, Politico also noted the following:
The tax-extender package tends to be a special interest bonanza, as it includes credits for alternative fuels, energy saving investments by small businesses, oil and gas production, tax credits for research and development, deductions for state and local sales taxes, employee mass-transit benefits, veterans hiring and special measures enacted to help New York following the Sept. 11 attacks.
Unfortunately, both parties are showing their true colors with these tax discussions. On the one hand, the Senate Democratic leadership has aides saying leadership is fine with a “clean extension” of these tax provisions. This is in direct opposition to what Democrats have long said about the Bush tax cuts and most other tax proposals put forward by Republicans. Senator Tom Coburn (R-OK) phrased Republican hypocrisy well when it comes to reforming the tax code through elimination of loopholes and lower rates, noting that, “If you renew tax extenders, how are you going to reform it…The point is it’s a wasted effort.”
The results of this particular bit of bipartisanship included “patching” the Alternative Minimum Tax and renewing a series of politically popular loopholes in the tax code. To be fair, some extenders were not renewed:
These [loopholes] include amending the alternative minimum tax (AMT), expanding the research and development tax break and provisions such as tax breaks for mass transit and teachers.
A $12 billion production tax credit for wind energy was added back into the Senate Finance legislation after being omitted from an earlier draft.
The credit divides Republicans. Some call it corporate welfare; others from states with energy interests back it.
Also added back into the “extenders” bill was an oft-derided credit for building motorsports complexes. Often called the Nascar tax credit, the seven-year, write-off period for certain motorsports racing tracks would cost about $78 million.
Tax-writers in Congress have been laying the groundwork for a tax code revamp for more than a year, a feat that will entail curbing special interest tax breaks.
Senators shelved more than a dozen tax breaks that are typically renewed without much debate and said it was a good first step to a tax overhaul.
Of course, Congress is never going to actually do a tax overhaul, especially with the election coming up. And for all the promises of shelving a few breaks in order to set the stage for tax reform, the politicians are hoping voters don’t realize that these extenders and patches have been in place for years. So rather than be a first step for reform…why, it’s nothing more than politics as usual. Especially if the shelved tax breaks give the federal government more tax revenue to spend badly, instead of paying down some of the deficit.
Additionally, the idea that extenders passed this year will help prepare for an overhaul next year only holds true if the major dynamics (say, Obama as President and Reid as Senate Majority Leader) stay the same. Since these and other factors are still very much up in the air (and assuming we even trust the current leaders in Washington to actually follow through on this potential overhaul), any hope of these extenders setting the stage for an overhaul is just that — hope.
Breaking on Hot Air