Menendez mulls change to rum tax in extenders bill

Sen. Robert Menendez (D-N.J.) told The Hill that discussions are taking place on adding an amendment to the tax extender bill that would cap rum tax subsidies used by Puerto Rico and the U.S. Virgin Islands to fund infrastructure projects. 

"We're in conversations, it depends on how those conversations go," the senator said about the prospect of his proposal being added to the bill.

The subsidy not only funds construction projects, but rum producers also receive a piece of it. The senator's amendment would cap the portion going to companies at 10 percent of the overall subsidy received by the island on which is resides.

By capping the amount returned to rum producers, the amendment would essentially kill an agreement that involves rum company Diageo moving from Puerto Rico to the Virgin Islands. Menendez opposes this move because the rum company would receive a greater share of the subsidy, which he argues would not benefit the Virgin Island's economy.

The Senate is expected to hold a procedural vote on the extender bill later on Wednesday. It is unclear if Senate Majority Leader Harry Reid (D-Nev.) has the support to advance the measure.

Senate Finance Committee Chairman Max Baucus (D-Mont.) is expected to piece together a trimmed-down substitute to the measure being voted on Wednesday. Menendez could seek to link his amendment to that bill.