Congress Debates Expiring Tax Provisions, Disagrees on Tax Hikes

By Stephen K. Cooper, Washington Staff Writer

Congress renews several aspects of the tax code every couple of years, prefering to revisit the debates rather than making the provisions permanent. A series of popular tax breaks--for education, charitable deductions, research and development, and alternative minimum taxes--often are held as bargaining chips during a congressional session. This practice also gives the political parties a vehicle for pushing public opinion, especially at election time.

The more things change, the more they stay the same.

In the House of Representatives, a bill to extend these expiring tax provisions was attached to a larger and more controversial energy and global warming bill. After passing the House, the energy bill (with the extenders package) was defeated in the Senate.

Now, the process must start over. And the clock is ticking because the provisions have already expired or will expire at year's end, when this Congress adjourns.

House Majority Leader Steny Hoyer (D-Md.) and Ways and Means Chairman Charles B. Rangel (D-N.Y.) threatened to withhold floor consideration of extender tax legislation in 2008 unless House and Senate Republicans accept their proposal to offset the bill's cost with higher tax revenues. Hoyer, Rangel and Democrats on the committee promised at a June 12 press conference that GOP lawmakers would not force them to abandon House pay-as-you-go (PAYGO) budget rules and bring the bill to a vote in the House without offsetting tax increases.

More than 100 Democratic lawmakers sent a letter to Senate Minority Leader Mitch McConnell (R-Ky.) supporting the Renewable Energy and Job Creation Bill of 2008, which passed the House on May 21. If the final extender bill does not include an offsetting tax increase, it's cost will have to be paid for by increased borrowing that will ultimately raise the budget deficit, they said.

"We believe the research and experimentation tax credit, various accelerated depreciation provisions, the energy tax incentives, the education, charitable, and other individual tax incentives . . . are very important to American families and to the U.S. economy," the letter to McConnell reads.

Asked if the House would eventually back down in its demands rather than see the bill fail to pass before Congress adjourns in 2008, Hoyer said he would not even bring the bill to the House floor for a vote. Rangel admitted that House Democrats did abandon the same promises in late 2007 with regards to passage of legislation providing relief from the alternative minimum tax, but he said Democrats were united in calling for a fully offset extenders bill.

Rangel and Hoyer's comments appeared to be designed to send a message to Senate Republicans, who have vowed, just as strongly, not to accept any tax increases. Ways and Means Rep. Paul Ryan (R-Wisc.) predicted that House Democrats would ultimately accept an extenders bill without tax hikes.

Ryan charged that House Democrats only adhere to PAYGO rules when it is convenient. Democrats are eagerly supporting other costly measures to extend unemployment benefits and provide benefits for military service members that do not have offsetting tax increases, he explained. "The fact is, they turn PAYGO off when its not convenient," said Ryan, who is the Ranking Member on the House Budget Committee. "The reality is PAYGO does not exist."

Posted June 24, 2008.