Domestic Taxes

Lawmakers line up behind tax breaks

Lawmakers from both sides of the aisle are starting to ramp up their efforts to renew targeted tax breaks set to expire at the end of the year.

Outside analysts and some lawmakers have derided those expiring preferences – collectively known as extenders – as little more than a grab bag of corporate giveaways. 

But even the most prominent of officials on Capitol Hill, including Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. Chuck Schumer (D-N.Y.), are lining up to make the case for their favored incentive. 

{mosads}That underscores that, despite all the criticism, these dozens of expiring tax breaks often trigger entrenched and intense support. It also gives another glimpse at the broader challenge that Senate Finance Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.) face in their ultimate goal of comprehensively rewriting the tax code.

By even last month, Schumer, the No. 3 Democrat in the Senate, had started lobbying for a provision that gives workers who use mass transit a comparable tax break to those who drive and use parking. The expiration of that preference would cost hundreds of millions of dollars for commuters in the New York area alone.

“As the price of commuting continues to climb, this tax break has become increasingly vital,” Schumer said, according to local media reports. “Mass transit is the lifeblood of the New York area, and this provision helps keep it flowing and affordable.”

McConnell, meanwhile, is ready to step to bat for a tax break that allows owners to more quickly write off the cost of racehorses, an important issue in the Bluegrass State. Democrats have tried to make McConnell’s support of that incentive an issue in the past. 

But the minority leader also faces a potentially bruising bid for a sixth term in 2014, with a primary challenge from the right in addition to Democratic opposition.

“Sen. McConnell supports extension of the Equine Equity Act and will work with the Finance Committee when they are ready to move on a tax extender bill,” Don Stewart, a McConnell spokesman, told The Hill in a statement.

In all, 55 separate tax breaks expire at year’s end, ranging from broad-based preferences like the credit for research and development to incentives with narrower bases – like credits for Puerto Rican rum and NASCAR tracks.

Those breaks are often renewed retroactively, as when a $76 billion collection was extended in the fiscal cliff deal almost a year ago.

The quiet inclusion of that package – crafted by Baucus and Finance’s ranking member, Sen. Orrin Hatch (R-Utah) – sparked criticism that lawmakers had slipped corporate pork into the must-pass legislation. 

This time around, Baucus and Camp say they’ll only deal with extenders as part of their ultimate goal of thoroughly rewriting the tax code.

But the support even these targeted, less expensive tax breaks have merely illustrates just how hard tax reform will be when even more expensive and popular breaks for home ownership, health care and charitable contributions are on the table.

“Like any other pieces of pork, they get in there because someone powerful wanted them there,” Howard Gleckman of the Urban-Brookings Tax Policy Center said of the tax extenders. “And they’re not going to just give them up.”

Gleckman also argued that extenders are hard to get rid of because, while they have powerful supporters, lawmakers don’t get that much budgetary savings by getting rid of them.

“There’s no incentive to get rid of these things, absent tax reform,” Gleckman told The Hill. 

Lawmakers representing other urban and suburban areas have also joined Schumer in pushing for an extension of the mass transit tax break. 

A bipartisan group of Philadelphia-area House members – including Reps. Allyson Schwartz (D-Pa.) and Jim Gerlach (R-Pa.) – called on House leaders to extend the incentive before the end of the year.

“In these challenging economic times, transit agencies in Pennsylvania and across the country have been forced to raise fares as they struggle to balance their budgets,” the six lawmakers wrote. “The additional burden of a significant tax increase is simply more than many Pennsylvania families can afford.” 

Top senators also got into the act in August 2012, when the Finance Committee marked up the bill that got tucked into the fiscal cliff deal. 

At that time, Sen. Debbie Stabenow (D-Mich.), who counts many Whirlpool employees among her constituents, pushed to extend an incentive for buying energy efficient appliances.

Sen. Ron Wyden (Ore.), now on track to take over as top Democrat at Finance, likewise lobbied for a provision for electric motorcycles. Wyden argued that tax writers had to think both short-term and long-term when trying to balance extending temporary provisions and seeking broader reform.

“Until you get on the big canvas, and you’re looking at a trillion dollar’s worth of expenditures, you exist in this dual world,” Wyden said then. “While you work for comprehensive reform, you can’t sit in a corner by yourself with your arms crossed.”

Tags Chuck Schumer Debbie Stabenow Jim Gerlach Max Baucus Mitch McConnell Orrin Hatch Ron Wyden

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