Sens.: Hold taxes with no offsets

Forty-one Republican senators on Tuesday sent a letter to Senate Finance Committee Chairman Max Baucus (D-Mont.) saying they wanted to extend popular tax relief this year without offsetting its budgetary cost.

The letter was gently worded, but the number of signatures — the minimum needed to block legislation in the Senate — sent a strong signal to Senate Democrats that Republicans would balk at attaching tax increases to expiring relief provisions.

{mosads}In their letter, the GOP senators noted that the Senate had voted already this year to extend expiring energy tax provisions without offsets. “We believe this same policy should be applied to the other expiring tax incentives and to the AMT patch,” they wrote, referring to legislation shielding middle-class taxpayers from the Alternative Minimum Tax.

Last year, Senate Republicans thwarted fully offset legislation to patch the AMT and extend other popular tax provisions because it was “paid for” with tax increases. The Senate ultimately passed legislation without offsets. Despite House Democrats’ deep misgivings about abandoning their pay-as-you-go budgetary rules, they were forced to accept the Senate version lest millions of unsuspecting taxpayers get hit with a surprise tax hike.  

Because Congress did not pass so-called extenders legislation last year, many popular business tax breaks, like the Research and Development tax credit and incentives for wind and solar energy production, have lapsed.

The GOP senators wrote that the uncertainty around “whether and when” the provisions will be extended “is causing hardship to families and businesses, which is exacerbating current economic difficulties.”

Baucus and Finance ranking member Sen. Chuck Grassley (R-Iowa) introduced legislation this month to extend AMT relief and a host of expiring tax breaks.

They did not attach offsets to the legislation, but Baucus said he intends to find “offsets that can pass both bodies and be signed by the president.”

A Baucus aide said that the chairman “still intends to bring a number of responsible offsets to the Senate Finance Committee for consideration when the AMT and tax relief extensions bill comes to markup.”