Over the years, Congress has always found a way to renew tax extenders such as breaks for research and development, equipment depreciation, even rum production.
But like other recent episodes — transportation, the budget, the payroll tax cut and the debt limit — House Republican leaders are finding the path more unpredictable than before.
Business groups are lobbying for quick action because many of the extenders expired last year, but GOP leaders are juggling election messaging, a broader tax reform effort and concerns from conservatives, said Members and aides.
House Ways and Means Chairman Dave Camp (R-Mich.) is providing rank-and-file Members an update on tax issues this week where the subject could come up, and a Members’ hearing is planned for April to hear from lawmakers on the issue.
In other words, there’s ample opportunity for input.
One concern is ensuring that moving on the tax extenders doesn’t detract from the momentum of the broader tax reform effort.
Tax reform proponents say the legislative landscape has shifted in the past several years in a way that makes a major tax reform bill plausible in the next Congress.
“A few years ago, people said tax reform was impossible. Now it’s starting to move in the direction of being inevitable,” George Callas, staff director for the House Ways and Means Subcommittee on Select Revenue Measures, recently told Roll Call.
Rep. Aaron Schock said the extenders and expiring 2001 and 2003 tax cuts are dividing attention on tax policy, preventing a focus on broader reform, and that clearing the deck could pave the way for a big reform bill in the 113th Congress.
The Illinois Republican added that House GOP leaders are moving to ensure rank-and-file Republicans understand the extenders aren’t a substitute for a reform bill.
“It’s important they understand this is a stopgap, not a substitute,” he said.
But business groups have been fiercely lobbying for action and expressing their displeasure over the lack of progress on the extenders, a Democratic aide said.
“I think they’re starting to feel the heat,” the source said.
Republicans have hinted that the Members’ hearing could be on April 26. It is traditionally used as a venue for Members to bring all sorts of issues before the committee, the Democratic aide said.
Camp and Subcommittee on Select Revenue Measures Chairman Patrick Tiberi (R-Ohio) issued a statement Thursday announcing that planning sessions on the extenders would begin after the April recess.
A spokeswoman for Camp said the meeting this week “is a precursor to [the] planning sessions.”
Camp’s outreach to Members could also help address concerns among conservatives about alternative energy tax breaks that could be in the package.
Schock and other Republicans are also urging a vote to extend the Bush-era tax cuts for individual income rates before the elections.
President Barack Obama and the GOP struck a deal at the end of 2010 to extend the tax cuts through 2012, including for high-income earners, but the president has expressed a desire to eliminate tax cuts for the upper income brackets.
Republicans want to extend the tax cuts for all income rates.
Schock said that the vote could help provide certainty to businesses and that he was hopeful the Senate would pick up the bill and it would be signed into law.
A Republican aide suggested the vote could be a political boon for the GOP.
“If we’re smart, we’ll hold a vote on the Bush tax cuts before the election but do it in such a way so it’s not a free vote for vulnerable Dems,” a senior GOP aide said.
Ken Kies, a managing director of the Federal Policy Group and former chief of staff at the Joint Committee on Taxation, said Federal Reserve Chairman Ben Bernanke provided a major boost to Republicans pushing to extend the Bush tax rates.
On Feb. 29, Bernanke told the House Financial Services Committee that the scheduled expiration of the Bush tax cuts and payroll tax holiday at the end of this year was a “massive fiscal cliff” that could significantly harm the economy.
“Republicans should be delirious,” Kies said. “You can just see the debate on the House floor.”
But Democrats could use their motion to recommit on an extension to make a difficult vote for the GOP, Kies said. And if Speaker John Boehner (R-Ohio) continues his push for regular order, allowing the bill to be marked up in the Ways and Means Committee, the hearings there could be contentious.
Obama and Congressional Democrats found political gold in the standoff over extending the payroll tax cut in December, but the president has not found a follow-up issue that has as much resonance, and taxes are often a high-profile issue in election years.