Senate Dismayed by House Tax Extension Bill

The Senate greeted a House Republican tax relief plan with exasperation, resignation and outright opposition hours before it was even officially announced Monday night.

The package, created by House Ways and Means Chairman Dave Camp, would retroactively extend through the end of 2014 dozens of tax breaks worth around $45 billion over the next 10 years. Many senators would prefer to either cut or make permanent many of the tax “extenders,” or—in their wildest dreams—actually pass a comprehensive tax reform bill, which could make the perennial holiday ritual obsolete.

After a closed-door meeting with other Democratic members of the Senate Finance Committee, Chairman Ron Wyden of Oregon promised a fight over the House legislation.

“The reality is you don’t just say ‘it’s my way’ and that’s it,” said Wyden. “We’ve got quite a ways to go. This game is not over.”

“A lot of one-year bills lock in the breaks for the businesses and don’t lock in or cover a lot of the social needs,” said Wyden.

When asked if he would support the House bill, Democratic Sen. Jay Rockefeller of West Virginia said he would “absolutely not.”

“No way shape or form,” he added. “And nobody in that meeting was [supportive of it]. Not one.”

Last week the White House issued a veto threat on a roughly $400 billion proposal hashed out by Senate Majority Leader Harry Reid and House Republicans because it failed to renew expansions of the Earned Income Tax Credit and the Child Tax Credit, which are due to expire in 2017. Rockefeller said that he’s focused on those provisions and the Health Coverage Tax Credit, which supports retirees who lost their health care coverage when their company goes under or abroad.

“They’re friendly to us, that’s all I can say,” says Rockefeller of the White House’s position.

Republicans could have more leverage in determining the extenders policy next session when they control both chambers of Congress, but some Senate members are dissatisfied with the latest House legislation, as the year-to-year schedule continues to cause businesses heartburn. While most affected companies assume that Congress will eventually grant them their tax relief, it’s still a “bit of a complicated expectations game” of what they believe Congress will do, according to Joseph Rosenberg, a Tax Policy Center senior research associate.

“Most of the provisions expired a year ago,” says Republican Sen. Rob Portman of Ohio, a member of the Finance Committee who prefers a longer deal. “So we aren’t really making much progress—we’re just catching up to where we are.”

“We’re going to have to deal with it again after the first of the year,” he adds.

Portman, like many Senate Finance committee members, prefer a two-year extension for some of the tax provisions, and to make parts of the tax code permanent, like tax relief for research and development. The R&D credit is one of the most expensive in the House bill—$7.7 billion over 10 years—but it has bipartisan support.

In April, the Senate Finance Committee passed a $85 billion package extending the over 50 tax relief provisions for two years; on Monday ranking Republican Sen. Orrin Hatch of Utah said he preferred that deal to the one introduced in the House. But some Republican senators say that in a crunch the House bill might prove to be the best option.

“My preference obviously is to write the [tax code] in stone so businesses can make legitimate decisions,” says Republican Sen. Jim Risch of Idaho. “[Businesses] have had to live with this before—and they’ve been able to to the best of their ability—but it is not a good deal … Going through this every year is just not a good way to do this.”

Still, Risch says it’s fair to say that he will “probably” support the House legislation. “This is a pragmatic place,” he says.