A number of tax “perks” expired at the end of 2017 including a credit for biodiesel backed by Senate heavyweights like Finance Committee Chairman Chuck Grassley, R-Iowa, and a credit for short-line railroad track maintenance that lawmakers have sought to make permanent in previous piecemeal bills.
The extenders issue has been hanging over the tax-writing committees since the last Congress and finding a way to deal with it would mean lawmakers could move to other issues – like debating technical corrections to the 2017 tax overhaul, Bloomberg thinks.
By floating a list of extenders that shouldn’t be renewed, Neal is attempting to gauge whether any of them lack vocal or strong enough constituencies to “push back.” That exercise could enable the committees to shape a package that might work in both chambers and prepare for an opportunity to hitch the remaining perks to a must-pass bill.
Rep. Mike Thompson, D-Calif., chairman of the Ways and Means Select Revenue Measures Subcommittee, said recently that he expects the committee to discuss which of the breaks can be ditched. At least for now, the Senate is making similar noises, Bloomberg said.
“Are they still needed? Are there reforms since they were enacted that we should be putting in place because the purpose has evolved? Should they be phased out?” Mark Warren, chief tax counsel for Senate Finance Republicans, asked a Washington conference May 30.
Still, the House and the Senate are going to have different paths in getting to agreement on a package, Dean Zerbe, a former Republican senior staffer on Senate Finance said.
“The ‘scrubbing’ is expected to involve a hard look the provisions proposed and allow supporters to re-justify the extension,” Zerbe said. “In the past, I’ve seen tax extenders get dropped or altered in these exercises.”
In February, Grassley and Sen. Ron Wyden, D-Ore., the top Democrat on the Finance Committee, introduced their own standalone extenders legislation as a signal to the House of their urgent interest in passage an extenders package.
If the House passes a pared down package of extenders with fewer than the 29 items proposed in the Senate’s bill, Grassley would see that as a basis for discussion, a GOP Senate aide told Bloomberg.”
Although it is always painful to get rid of the breaks, it might be possible to find some that can be phased out, a former top Democratic Ways and Means staffer said. But influential beneficiaries want to make them permanent and continue to press the issue with lawmakers. Such fights can be brutal, and both the House and Senate would like to avoid them.
An example of a provision that has strong support is the tax code Section 45G maintenance credit. A number of lawmakers have been trying to make it permanent for some time. Ways and Means member Earl Blumenauer, D-Ore., introduced a bill in January that now has more than 200 House cosponsors. Companion legislation in the Senate, introduced by Finance member Mike Crapo, R-Idaho, has more than 40 cosponsors.
Several Ways and Means Democrats, including Rep. Lloyd Doggett, D-Texas, are supporting an effort to have the extenders paid for and are continuing to negotiate what offsets they will propose. One initial draft on the House side pays for the extenders through 2019 by putting an early end to the 2017 tax law’s expanded estate tax exemption.
Still, some legislators and others consider efforts to renew the tax extenders as “a circus,” with very vocal critics. Marc Goldwein, senior vice president and senior policy director at the Committee for a Responsible Federal Budget, said “the right way to scrub them out at this point is to let them stay dead. The extenders expired almost 18 months ago now, that was by design.”
The longer extenders remain expired, the more likely they are not to come back, Goldwein said. Still, he said he could see an extenders package being attached to must-pass legislation later in the year.
CRFB was among the groups that wrote to congressional leaders in May asking them to let the tax breaks stay dead. The diverse organizations that signed on to the letter included the Tax March, which calls for heavier taxes on the wealthy along with the Koch brothers-backed Americans for Prosperity.
Extending tax breaks for favored programs has long been an approach to channeling support for struggling programs but it has received increased scrutiny from budget hawks in recent years. This is a debate producers should watch closely as it emerges, Washington Insider believes.