Build America Bonds Merit Tax Panel's Time, Democrats Say
Top Democratic tax writers in the U.S. House said Republicans are unfairly excluding Build America Bonds and benefits for energy manufacturing from a debate over reviving expired tax provisions.
Those tax breaks and others that expired at the end of 2010 were effective and should be considered along with provisions that lapsed in December 2011, Democrats Sander Levin and Richard Neal said in a letter to Republican Dave Camp, chairman of the House Ways and Means Committee.
“The majority’s approach fails to recognize the importance of tax provisions in promoting job creation, investment and economic growth,” Levin and Neal wrote in a letter delivered yesterday.
A Ways and Means subcommittee plans to meet tomorrow to discuss expired tax breaks, such as the deduction for state and local sales taxes, the research and development tax credit and multinational companies’ ability to defer U.S. taxes on financial services income earned outside the country.
Republicans, who are working on a tax-code overhaul that would eliminate targeted breaks and reduce rates, have said they want to review the effectiveness of various provisions before deciding whether to extend them.
The panel will hear testimony only from House members who introduced bills on a list of tax breaks that mostly expired at the end of 2011 or are scheduled to expire in December.
“This hearing provides a formal opportunity for the subcommittee to hear from our House colleagues about the merits of extending -- or not extending -- many of these tax policies,” Republican Representative Pat Tiberi of Ohio, chairman of the tax subcommittee, said in a statement.
Levin, of Michigan, and Neal, of Massachusetts, wrote that they were “troubled by the tone and substance” of the announcement of the hearing because it didn’t distinguish between provisions designed to be temporary and others that they said merit extension.
“This is an extenders hearing, and, since Democrats failed to extend these stimulus provisions in 2010 when they controlled the House, the Senate and the White House, it seems obvious that they do not fit the parameters for this hearing,” said Michelle Dimarob, a spokeswoman for the Ways and Means Committee.
The definition of tax extender for the hearing excludes broader fiscal issues such as income tax rate cuts that expire at the end of this year. It doesn’t allow discussion of tax provisions that Congress let lapse in 2010 as part of a bipartisan deal that extended income tax rate cuts.
After that agreement, Republicans took credit for allowing Build America Bonds and energy manufacturing incentives created in the 2009 stimulus law to expire.
“Republicans were able to prevent a long list of existing tax subsidies (estimated at over $100 billion) from being extended,” said a Ways and Means Republican press release in 2010 that cited 73 provisions that were allowed to expire.
Build America Bonds were created in 2009 to reduce borrowing costs for municipalities as banks remained cautious about extending credit after the financial crisis. The Treasury paid 35 percent of the interest on the securities while the interest on the bonds was taxable, in contrast to the income-tax exemption for buyers of traditional municipal bonds.
Democrats, including the Obama administration, have unsuccessfully tried to revive the stimulus tax breaks. Republicans said Build America Bonds generated high fees for Wall Street underwriters.
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