Saturday, August 4, 2012

Senate Finance Committee Wimps Out On Tax Reform

Thursday’s meeting of the Senate Finance Committee was supposed to be this nation’s first step toward comprehensive reform of the Internal Revenue Code, attacking a list of 75 different special interest tax incentives that don’t really have anything at all to do with social policy – the usual justification for special interest benefits conferred by Congress through tax code loopholes. Instead, it turned out to be a clear demonstration of just how wimpy Senators can be when faced with taking away tax benefits for their own constituents.

Here are some of the specialized tax advantages that were on the agenda for termination, but ended up being retained in future tax years: 1) accelerated depreciation for capital improvements at NASCAR racetracks (wonder what the social policy behind that one could be?); 2) millions of dollars in rum tax rebates for Puerto Rico and the U. S. Virgin Islands (wonder which Senate Finance committee members drink daiquiris?); 3) economic development tax credits for StarKist’s tuna cannery in American Samoa; 4) tax credits of $2,500 for buyers of electric motorcycles and other low speed electric vehicles (the Senators did remove golf carts from the list of qualifying electric vehicles, though). Out of 75 special interest tax benefits on the termination agenda, the Senators could only agree that 20 were fit for elimination. Characterizing these moves as “more than baby steps,” Finance Chairman Max Baucus crowed “I’m proud of what we’ve done as a committee.”

Other committee members were somewhat more truthful in their remarks defending the small number of special interest perks removed from the tax code in the committee report, which won’t even get a vote in either house until mid September, when the six week summer recess concludes. Michigan Senator Debbie Stabenow candidly pleaded for the NASCAR accelerated depreciation as a job saver in her state: “Big tax reform is where we need to look at all this stuff,” she said. Meaning, let’s kick this can down the road until after the elections. Oklahoma Senator Tom Coburn was more candid. “Nobody wants to make the hard choices around here,” he intoned.

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