Senate Finance hashes out tax extenders agreement

“This effort has proven that legislating can still be done if both sides work together,” Baucus said in a statement. “We’re facing serious challenges with the fiscal cliff at the end of the year, and this win shows we’re able to come together to tackle tough problems. This is exactly the kind of work it will take to address the fiscal cliff.”

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“This legislation demonstrates that there is a will to subject longstanding tax policies to the full and much-needed public scrutiny of the American people,” Hatch said in his own statement. “This is a first step toward the ultimate goal of comprehensive tax reform that shows that there is a path to resolving the challenges we face as a nation.”

Still, even with the committee’s agreement, Democrats and Republicans remain at loggerheads over whether to extend all or just some of the Bush rates, with a final decision not expected until after November’s election.

Washington tax observers have also predicted that the extenders could get pushed back into the post-election session of Congress. House Republicans are conducting their own tax extender examination, and GOP tax writers in that chamber have predicted that a final agreement won’t be hashed out until the lame-duck session.

With lawmakers about to break for their August recess, Senate Majority Leader Harry Reid (D-Nev.) suggested last week that the Senate could deal with tax extenders in September, if work on the package wasn’t concluded this week. 

The Senate Finance agreement came together after lawmakers from both sides said they were making progress, while also acknowledging that crafting a package of extenders was a tall task. K Street has a keen interest in many of the expired or expiring provisions, and lawmakers have regional concerns about some of the extenders.

In its release on the measure, Senate Finance said that the so-called AMT patch would assist 27 million taxpayers in 2012, and the package extends provisions like a deduction for state and local sales taxes, breaks for alternative energy and a credit to incentivize business investment in low-income areas. 

Republicans and Democrats had been sparring over whether to include provisions that had been expanded in the 2009 stimulus package, like an education credit, something that Republicans said were not typically included in an extenders agreement. 

“That’s one of the concerns,” Senate Minority Whip Jon Kyl (R-Ariz.), also a Finance member, told reporters Tuesday. “And we had tried to restrict it just to the regular extenders.”

“There’s a lot of resistance,” Sen. John Kerry (D-Mass.) told The Hill before the package came together. “Nothing new around here.” 

The agreed-to package does not appear to include those additional provisions, nor a production tax credit valued and called vital by the wind industry. Mitt Romney, the presumptive GOP presidential nominee, has said he wants to see that credit lapse, something that did not sit well with Republicans like Sen. Chuck Grassley (Iowa), a former Finance chairman. 

Supporters of the production tax credit are expected to push to add the provision to the extenders package on Thursday, a congressional aide said. 

"Sen. Baucus will fight hard for it," said Sean Neary, a spokesman for the Montana Democrat.

Democrats also called the inclusion of the AMT patch a major victory, and urged Republicans not to stand in the way of the bill coming to the floor.

"Republicans had been trying to hold AMT relief out as leverage for the lame-duck negotiations," Sen. Chuck Schumer (N.Y.), a Finance member and Democratic messaging guru, said in a statement. "Their plot was to dangle the threat of a clobbering tax hike on the middle class to bait Democrats into accepting an unbalanced, year-end deal. That plan won’t work once AMT relief is approved."

Ben Geman contributed.

This post was updated at 1:45 p.m.