Bloomberg News

Democratic Payroll Negotiators to Push for Other Extensions

January 24, 2012

Jan. 23 (Bloomberg) -- Democratic U.S. senators who are members of a panel negotiating a payroll tax cut extension for the rest of 2012 say they will push to attach extensions of other expiring and expired tax breaks to the measure.

The House and Senate conferees will hold their first meeting tomorrow. Unless Congress acts, the 2-percentage-point payroll tax break for employees will lapse on Feb. 29. Without action, emergency unemployment benefits also would expire, and physicians who are reimbursed through Medicare would receive lower payments from the government.

An impasse in December over how to pay for continuing the payroll tax cut led lawmakers to pass a short-term extension before the tax break expired on Dec. 31, and the addition of elements to the package could complicate discussions. Some of the other tax breaks being discussed expired at the end of 2011 while others won’t expire until the end of this year.

Maryland Senator Ben Cardin, a Democratic negotiator, said there was “a great deal of interest to make sure that, particularly the energy provisions, are included” with the payroll tax cut. Though it is unclear which tax breaks Democrats will push to extend, the list in the past included tax incentives for renewable energy that expire at the end of 2012.

“We need to take care of giving predictability to alternative energy,” Cardin said in an interview.

‘Precedent’

Cardin said while there was “a lot of precedent for not offsetting extension of existing tax policies,” such as the renewable energy incentives, he would be willing to consider offsetting the extension if Republicans insisted.

Senator Bob Casey, a Pennsylvania Democrat and the chief sponsor of the payroll extension proposal in the Senate in December, said in an interview that he too would press to include the other extensions in the package, although his primary focus was on continuing the payroll tax cut through the end of 2012.

Scott Mulhauser, a spokesman for Senate Finance Chairman Max Baucus, a Montana Democrat, said in an e-mail that Democratic negotiators, including Baucus, would seek to include some of the other tax extensions in the payroll package.

Senate Majority Leader Harry Reid, a Nevada Democrat, on Dec. 13 endorsed the idea of attaching the package of tax extensions -- including a $250 a year break for teachers and a tuition tax credit -- to the payroll measure.

$35 Billion Package

The $35 billion package also includes incentives such as a research and development tax credit and a benefit for banks’ overseas operations that expired on Dec. 31. Other items on past lists have been the ability to deduct sales taxes in states with no income tax, and accelerated depreciation for some restaurants and motorsports tracks.

Companies including General Electric Co., Whirlpool Corp., Microsoft Corp. and Xerox Corp. have lobbied for the extension of some of the tax breaks in the payroll package.

One Republican negotiator questioned whether extensions of the other tax breaks would be better addressed apart from payroll tax cut negotiations. Arizona Senator Jon Kyl said in an interview that he “wouldn’t want to add something else to the mix” until lawmakers had resolved the payroll tax, unemployment and physician payment issues.

“I’m not sure this is the place to do it,” Kyl said. “Let’s get done what we know we have to get done first and then see if there’s anything that could be added.”

--Editors: Jodi Schneider, Mark McQuillan.

To contact the reporter on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at Jschneider50@bloomberg.net


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