In going after some of these tax credits, Republicans on the House Ways and Means Committee are proposing a trade-off by lowering corporate and individual tax breaks. And while Republicans would like to keep tax reform discussions separate from the deficit reduction talks led by Vice President Joe Biden, the negotiators may still discuss closing certain tax loopholes.
Some tax breaks, like the depreciation of business equipment, are well known and have large constituencies on Capitol Hill. Others, like the exclusion of interest from state and municipal bonds are more technical, yet still have a powerful lobby that has protected them. Their costs to the Treasury range from a few million to billions.
But GOP insiders are making no mistake about new scrutiny of the long-protected class of tax credits and other breaks: They’re on the chopping block for real now. The ethanol vote in the Senate last week, followed by a less sweeping rollback of certain ethanol benefits in the House, seemed to open the dam for Republicans to discuss tax reform.