Top Senate Democrat Pushes Extending Some Expiring Tax Extenders, Including Alternative Fuels

December 14, 2011 12:52 AM
 

via a special arrangement with Informa Economics, Inc.

Move seen as posturing ahead of a likely compromise ahead

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Senate Majority Leader Harry Reid (D-Nev.), as part of the debate over extending an expiring payroll tax cut, said today that Congress should renew a package mix of tax breaks for individuals and companies that are set to expire at the end of this year.

"We do them at the end of every year," Reid said following the weekly Democratic luncheon caucus. "They’re extremely important. They’re job-creating and it’s very important we do that. Not only are they job-creating, but some people depend on them."

Without a congressional extension, more than a few temporary tax breaks known as "tax extenders" will sunset Dec. 31. As part of last December’s tax deal (PL 111-312), Congress renewed the tax breaks retroactively for 2010 and extended them through 2011 – those included the 45-cent per gallon ethanol tax incentive, and the separate biodiesel tax incentive.

Tax breaks scheduled to expire include a tax credit that companies can use to cover some of their research and development expenditures and a deduction for sales taxes paid by people who live in states without an income tax. Others include incentives for the production of alternative fuels, the "new markets tax credit" given to entities that invest in low-income communities and a more generous allowance for mass transit benefits provided by companies to their employees. Also, millions of middle-class Americans face the prospect of higher taxes next year because the alternative minimum tax (AMT), typically indexed for inflation on a temporary basis, has not yet been "patched" for 2012.

The House late Tuesday, confronting a veto threat from President Obama, voted on a bill (HR 3630) that would extend a one-year-old Social Security payroll tax cut for workers. Democrats object to several features of the GOP measure, including a provision that would force Obama to decide within 60 days whether to grant a permit for construction of the Keystone XL oil pipeline from Canada to the Gulf of Mexico. The House bill, backed by Republican leaders, also renews several other expiring programs, such as long-term jobless benefits and a combination of tax breaks that allow companies to immediately deduct the full cost of new equipment. But the bill does not include the package of tax extenders, nor an AMT patch. The 234-to-193 vote was largely along party lines, with the next sep being negotiations between the House and the Senate likely continuing into the weekend. The House bill was opposed by 14 Republicans, but it attracted the support of 10 Democrats.

Also, Obama administration officials signaled that President Barack Obama will not sign an omnibus spending bill until a bipartisan agreement on his payroll tax holiday can be completed.


Comments: Some congressional sources say the late push by Sen. Reid is posturing for dealing with House Republicans, who have a far different approach to the matter. Thus, contacts signal, which tax cut extenders may actually end up in final legislation is murky at this time.


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 

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