Key production tax credit backer worries Bush cuts may muddle path forward
Sen. Charles Grassley (R-Iowa), a member of the Finance Committee, said Chairman Max Baucus (D-Mont.) asked members of the panel during a closed-door meeting last week to address the expiring provisions, such as the wind production tax credit, broadly known as tax extenders, separately from legislation dealing with the future of income and other tax breaks passed in 2001 and 2003.
Grassley, who sponsored the first production tax credit bill in 1992 and has introduced legislation to extend the credit for another two years, said he would be willing to accept those conditions but predicted that the rest of his caucus would not be willing to go along.
“There’s nothing wrong with the proposition that Baucus put forth that we ought to do the extenders without changing the extenders and that we ought to pledge not to offer an income tax amendment or some other amendment,” Grassley told E&E Daily during a brief interview in the Capitol. “And I agree with all that, but I don’t see how, if he’s got to have all of us pledge to that, he ain’t going to get everybody to pledge to that.”
Grassley said the suggestion that extenders and the George W. Bush-era tax cuts be handled separately is “so rigid that nothing’s going to get done until after November.”
Another GOP member of the Finance Committee, Sen. John Cornyn (R-Texas), acknowledged that supporters of the Bush tax cuts would use the extenders as leverage to see those cuts continue.
“I can’t imagine they would have them separately,” Cornyn said in an interview yesterday evening. “For those who want to see continuation of current tax rates, that makes no sense. We’d be giving up leverage that would allow us to accomplish our goals, so I don’t see that happening.”
Cornyn also said Democrats were uninterested in dealing with the extenders and broader tax cuts before the election, which he said was unwise because of warnings from experts that the economy could fall back into a recession if the tax cuts are allowed to expire at the end of the year and if Congress does not undo mandatory defense and discretionary spending cuts known as the “sequester.”
Regarding the production tax credit, which provides wind developers 2.2 cents for every kilowatt-hour of electricity they generate, Cornyn said Congress should start from scratch on that and the other extenders. Such comprehensive tax reform is not expected to be taken up in earnest until at least next year, and Cornyn said he expects the House to send over legislation extending all current tax rates for a year to provide time for that debate to play out.