House Ways & Means panel not yet mulling extenders; tax reform draft expected soon
Rep. Pat Tiberi (R-Ohio), the chairman of the subcommittee with jurisdiction over the temporary tax breaks, said Ways and Means Chairman Dave Camp (R-Mich.) has not diverted his focus from overall tax reform and was not ready to consider a “tax extenders” bill.
“The chairman believes that moving something like that hurts the process of tax reform,” Tiberi told reporters yesterday.
The focus on extenders took on new life last month after Senate Finance Chairman Max Baucus (D-Mont.) was nominated to be the next U.S. ambassador to China, meaning he will retire from the Senate sometime in the next month or so. Baucus and Camp worked closely together on the tax reform legislation that both had hoped to make a legacy project.
But Baucus’ early exit has led most observers to believe that not enough time remains for his likely successor as chairman, Sen. Ron Wyden (D-Ore.), to produce his own tax reform package and move it through the Senate by the end of this year.
In the meantime, Camp continues drawing up his own comprehensive tax reform bill, which will be released as a single product, as opposed to Baucus’ approach of releasing a procession of smaller draft bills affecting various aspects of the economy.
Rep. Kevin Brady (R-Texas), a senior Ways and Means member who led a working group on energy tax issues earlier this year, said there were “concerns” with Baucus’ proposals to eliminate key oil industry tax breaks, such as the ability to deduct intangible drilling costs or rely on so-called last-in, first-out accounting rules.
“I think there were real concerns on the capital recovery side of that, simply because energy, no matter where you’re at, is so capital-intensive, the need to recover it quickly and reinvest it,” he told reporters.
Tiberi acknowledged that Baucus’ exit “certainly has an impact on the process” but said it was too soon to know what that would be.
“Clearly, Ron Wyden is a guy who wants to do tax reform — there’s no question about that. I’ve talked to Ron about that. He is, I think, a great partner from that standpoint,” Tiberi told reporters.
Still, Wyden has said repeatedly that he wants to move a tax reform package this year that would address dozens of breaks that expired at the end of last year, including the renewable electricity production tax credit, various alternative fuels tax credits and incentives meant to promote energy-efficient homes and appliances. Tiberi said he could only speak to House planning.
The emerging dynamic appears to mirror the last time extenders rose to the top of Congress’ agenda. In 2012, the wind industry led an aggressive lobbying effort to secure an extension of the PTC, which was set to expire at the end of that year. The credit has bipartisan support on account of the industry’s dramatic growth, especially in conservative states and districts in the middle of the country.
While tax extenders supporters were prevalent in both chambers, the House in 2012 showed little enthusiasm for marking up its own tax extenders bill. Instead, Baucus convened a Finance Committee markup just before the August recess that year to approve legislation extending the PTC — with a lucrative tweak that will allow the industry to receive the credit for at least another year or two even if it is not renewed.
Baucus’ extenders bill — which included several dozen tax breaks, among them the widely popular research and development tax credit and a credit that would benefit Puerto Rican rum producers, as well as the energy incentives — came out of committee on a strong bipartisan vote. Then the House did nothing.
The bill sat on the shelf until the end of the year, at which point it was inserted as a last-minute sweetener into the “fiscal cliff” deal enacted at the start of 2013, the primary goal of which was to prevent individual income taxes from rising for most Americans.
Observers say a similar scenario could play out this year, but the biggest change is the lack of a similar must-pass piece of legislation onto which extenders could be attached.