Senate panel lets some federal tax breaks expire, calling it prelude ...

The Senate Finance Committee congratulated itself Thursday for passing a ?tax extenders? package, which grants new life to tax breaks that expire annually unless they are renewed.

Among the list of extended tax breaks that matter to Texans: the production tax credit for wind-energy production and the deduction for state and local sales taxes.

Typically, senators would congratulate themselves for overcoming political obstacles to extend all of the breaks. On this occasion, they celebrated the bill because it lets some of the tax breaks die.

The list of expiring tax goodies includes incentives for investing in the District of Columbia, fast-track expensing of costs associated with brownfield redevelopment, and a tax credit for ethanol production. Not exactly a list of sacred cows, but in past years senators might have extended them without much debate.

?I think we have just eliminated about 20 provisions in the tax code, so it?s a good start,? said Sen. Max Baucus, a Montana Democrat who chairs the finance committee. ?We have a long way to go. But I am proud of what we have done as a committee.?

The bill passed the Finance Committee 19 to 5, with Sen. John Cornyn, R-Texas, among the no votes. Cornyn said he would have preferred to ?start from scratch? and require the beneficiaries of tax breaks to prove ?they are still justified.?

Cornyn later issued a statement that said he voted against the bill because it falls short of ?fundamental tax reform.?

Of course, fundamental tax reform would involve gutting many of the more than $1 trillion in tax breaks that are considered untouchable ? unless they can be offset by lower marginal tax rates. Tax reform is considered a huge lift, and something for the next president and the next Congress to tackle in 2013.

Sen. Orrin Hatch, R-Utah, voted for the bill, but didn?t oversell what it accomplishes.

?On a very limited basis, it is a dry run for the fundamental tax reform that will come and must come in the near future,? he said.

Source: http://bizbeatblog.dallasnews.com/2012/08/senate-panel-lets-some-federal-tax-breaks-expire-calling-it-prelude-to-tax-reform.html/

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