By ANDREW TAYLOR
Associated Press
WASHINGTON (AP) - The
Senate's tax-writing panel voted to renew dozens of tax breaks for
businesses like biodiesel and wind energy producers, even as the
GOP-controlled House trumpeted symbolic legislation to erase them and
create a new tax code with lower rates and fewer special interest tax
breaks.
The $200 billion-plus
package was approved by the Senate Finance Committee Thursday on a
bipartisan 19-5 vote. It was anchored by a two-year provision to protect
middle- and upper-income taxpayers from being hit by the alternative
minimum tax, shielding them from higher levies originally meant to
prevent the rich from escaping taxes altogether.
The bill faces an uncertain
future and is likely to get lumped into a year-end debate in which
lawmakers tackle the so-called fiscal cliff - a combination of the
expiration of Bush-era tax cuts and $110 billion in automatic spending
cuts to the Pentagon and domestic programs that, taken together, have
the potential to drive the economy back into recession.
The cost of Thursday's
package ballooned by more than $50 billion since its release on
Wednesday, including a production tax credit for wind and other
renewable energy producers of electricity criticized by presumptive GOP
nominee Mitt Romney. That provision was initially targeted for
elimination, but garnered critical support from Republicans like Charles
Grassley of Iowa.
Supporters of a tax break
for builders of NASCAR tracks and other motorsports facilities also
managed to revive it after it had faced the chopping block.
Panel members claimed the
exercise in legislative sausage making was actually a step forward for
tax reform because they had summoned the courage to allow almost 20 tax
breaks to expire. They included a much-criticized tax credit for ethanol
producers.
Top panel Republican Orrin
Hatch of Utah - a longtime proponent of a popular tax credit for
businesses that invest in research and development - said Thursday's
developments represented progress given that the number of tax breaks in
the annual "extenders" debate had ballooned from 42 in 1998 to 154 last
year.
"The tide is turning,"
Hatch said. "For the first time in my 21 years on this committee, we are
deliberately moving in the opposite direction."
"It's the first step in a
long journey," said Kent Conrad, D-N.D., though he acknowledged "there
is a certain irony" to claiming the renewal of all the tax breaks is a
step forward for tax reform.
Opponent Tom Coburn,
R-Okla., however, calculated that the Senate measure would only save
taxpayers about $6 billion - a pittance compared with this year's
expected deficit of $1.2 trillion. He said the panel's moves were a step
backward for hopes of doing tax reform next year.
"That's better than
nothing. But it ain't anywhere close to where we have to be if we're
going to fix this country," Coburn said.
"You want the pressure
jacked up to do tax reform? Don't renew any extenders," Coburn said.
"That's how you get tax reform done."
The tax breaks package is
advancing even as efforts to prevent the expiration of numerous Bush-era
tax cuts have come to an election year impasse over whether to extend
the full range of Bush tax cuts or allow expiration of those enjoyed by
people earning more than $200,000 a year and couples making more than
$250,000. President Barack Obama has demanded that these tax cuts be
terminated.
The House voted to fully
renew the Bush tax cuts on Wednesday. On Thursday, it took up
legislation putting the House on record in support of tax reform that
would lower the top income tax rate to 25 percent, financed by cleaning
out the nation's loophole-cluttered tax code. The tax reform effort
wouldn't begin until next year.
Democrats said the GOP tax
reform plan would raise taxes on the middle class while awarding
millionaires with disproportionately large tax cuts. To cut the rat
es so low would require eliminating popular tax breaks like the mortgage interest deduction, they say.
"The only way to finance
these massive tax cuts for the highest earners is to eliminate or
significantly curtail provisions that support the middle class," said
Rep. Sander Levin, D-Mich.
The Senate measure combined
more than 50 provisions, including popular tax breaks for individuals
like the deduction for state and local sales taxes in states without an
income tax and a tax-free benefit for employees who take mass transit of
up to $240 a month.
Popular business tax breaks
in the measure include provisions to allow small businesses to write
off purchases of equipment, tax credits for biodiesel, and a tax credit
for producers of renewable electricity through sources like wind,
biomass, geothermal energy and hydropower.
For his part, Coburn lost
an attempt to kill tax credits for manufacturers of energy efficient
appliances. Manufacturers of dishwashers can claim a maximum $75 credit
but makers of refrigerators can get credits of up to $200, while
manufacturers of clothes washers can reap tax subsidies of up to $250.
He also lost a bid to scale back the wind energy tax break.
Sen. Ron Wyden, D-Ore., a
longtime sponsor of tax reform, won a committee vote to revive a tax
credit of $2,500 for purchasers of electric motorcycles.
"I've spent 10 years
working for tax reform," Wyden said after the vote. "But until you get
it you're not a purist who sits around and says, 'Oh, my constituents
don't matter.'"
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2012 The Associated Press. All rights reserved. This material may not
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