Rum, race cars, windmills win Senate tax favor
WASHINGTON (Reuters) - The U.S. Senate's tax committee approved a package of special-interest tax breaks on Thursday, including three measures that were left off the list two days ago in a brief bipartisan nod toward fiscal reform.
In a sign of business-as-usual on Capitol Hill, the Senate Finance Committee backed tax breaks for auto race tracks, wind energy, multinational corporations, Hollywood, school teachers, Puerto Rican rum producers, college tuition and more.
About 50 temporary tax breaks won a two-year extension from the panel in an $85 billion legislative package known as the "extenders," so named because they need to be renewed regularly. They will next go to the full Senate for consideration.
The tax-writing House of Representatives Ways and Means Committee is set to vote on its own extenders package next week.
Most of the extenders technically expired at the end of 2013. The measure just approved would renew them retroactively, costing the federal government billions of dollars in lost revenues, to the dismay of fiscal hawks.
"What this country should be doing is overhauling the disaster of a tax code," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in a statement.
"Instead we are seeing Washington at its very worst as special interests and members of Congress run to protect their favorite tax breaks," said MacGuineas, whose group advocates for reducing the federal deficit and debt.
On Tuesday, Senate Finance Chairman Ron Wyden, a Democrat, and top committee Republican Orrin Hatch had unveiled a slimmed-down "extenders" package. At the time, Wyden said he was "determined this will be the last extenders bill on my watch."
At the committee meeting, Wyden reiterated that he wants to end the extenders process as part of a broad overhaul of the tax code. But he acknowledged that that will not happen soon.
"Today, we've got to balance short-term needs with long-term goals," said Wyden, who just recently took over the committee.
The approved package includes a tax break used by big companies to avoid corporate income tax on capital transfers between offshore units, known as the look-through rule. Wyden had excluded this in his original bill, but it was put back.
Tax breaks for wind energy production and auto racing tracks were also added back to Wyden's legislation. Other tax breaks were renewed included ones for teacher supply costs, mortgage insurance costs, railroad track maintenance, bonus depreciation for businesses, and business research and development.
The committee approved two amendments to help small businesses. Senators voted to allow small businesses to get the research and development tax credit when they are incurring losses. Additionally, the committee approved inflation protection for certain small business tax breaks.