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Democrats Take Aim at Business Tax Breaks

Tom Williams/Roll Call
Senate Majority Leader Harry Reid might force a series of votes on eliminating corporate tax breaks in the coming weeks.

Emboldened by Republican support for eliminating ethanol tax subsidies, Senate Democratic leaders are poring over a list of corporate tax breaks and eyeing votes that could put GOP Senators on the spot.

“We’re looking at going on offense on these ridiculous taxpayer-paid subsidies they are protecting,” one Senate Democratic leadership aide said.

Democrats said they haven’t yet settled on which subsidies could find their way to the Senate floor, but eliminating a tax break for private jets is among those that have been discussed, the aide said.

Earlier this year, Democrats lost a vote on eliminating oil industry tax breaks but felt their political point was made.

“We did that with the oil subsidies, I thought, very effectively, and so we’re looking at other options along those lines,” Senate Majority Whip Dick Durbin (D-Ill.) said.

And Democrats and the White House have been pushing for about $400 billion in new revenue as part of bipartisan negotiations on raising the federal debt ceiling. Those negotiations collapsed last week when House Majority Leader Eric Cantor (R-Va.) and then Senate Minority Whip Jon Kyl (R-Ariz.) pulled out after declaring an impasse on taxes.

But Democrats believe the June 16 ethanol vote exposed a rare split on taxes in the GOP and helped established the principle that corporate tax loopholes could be closed to help shrink the deficit. By setting up repeated votes, Democrats could force Republicans to choose — again and again — between these tax provisions and cuts to social programs such as Medicare and Medicaid.

Kyl said Monday that while tax increases cannot be part of a deal, Republicans were willing to look at user fees and other revenue items.

“Revenues have never been off the table,” Kyl said, declining to discuss specifics other than to say it was a relatively small part of the overall conversation.

“There are some user fees that are probably way low compared to when they were originally set, and there are some other receipts that the government could receive,” he said. That includes means testing of some federal programs, Kyl said.

But he said the ethanol issue was not necessarily a precedent.

“Ethanol was a one-off proposition. It’s bad policy, and I don’t care if it raises revenue or loses revenue or what, we should eliminate it,” Kyl said.

He added that there are some other similar items in the tax code that could raise revenue, but Republicans generally want to eliminate those that Democrats like and Democrats want to eliminate the ones that Republicans like.

Kyl also said Republicans would prefer to eliminate tax breaks as part of an overall tax reform package.

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