* More than $35 billion in breaks have expired
* In years past, Congress approved as package
* New scrutiny from Congress amid fiscal concern
By Kim Dixon
WASHINGTON, April 24 (Reuters) – A litany of tax breaks –
including one for NASCAR racetracks and one for Puerto Rican rum
production – will be on display in a U.S. congressional
committee hearing on Thursday.
With slim to no chance that any of them will be repealed
soon, the $35 billion in tax breaks nonetheless are being
examined by lawmakers as they brace for a tidal wave of fiscal
decisions at the end of the year, which some pundits call
“Taxmageddon” or the “Fiscal Cliff.”
After the Nov. 6 elections, a surge of issues will hit
Congress, including expiration of temporary tax cuts made under
Presidents George W. Bush and Barack Obama, huge budget cuts
ordered last year, and what to do about these tax breaks.
Taken together, the tax breaks are known on Capitol Hill as
“extenders,” which means they are all supposedly temporary parts
of the tax code. Congress for years has routinely extended them,
but that could be about to change with the annual federal budget
deficit at about $1 trillion.
Business lobbyists expect the tax breaks, which expired last
year, to be renewed retroactively at year’s end, but there is
some worry because of lawmakers’ increased focus on offsetting
their cost.
The Senate’s Republican leader, Mitch McConnell, said
recently that “there are a number of members of my conference
who have serious questions about some of the provisions.
“For a number of years, Congress has reflexively extended
all of these measures without meaningful review or oversight,”
he said, calling for a review and for dropping some of them.
That will be easier said than done, since each of the tax
breaks – which also include the corporate research and
development tax credit – has an interest group in its corner.
The tax-writing U.S. House of Representatives Ways and Means
Committee, chaired by Republican Dave Camp, will convene the
hearing to examine the list of extenders. It will be structured
as a “members’ day” when lawmakers individually will go before
the committee to defend tax breaks that they support.
“This will be an opportunity to really start going through
the whole list and making people defend the ones that they want
to keep,” said Joanne Thornton, an analyst at Guggenheim’s
Washington Research Group, which advises investors.
Tax breaks for alternative energy projects are on the list.
Republicans are expected to attack these at the hearing.
Here are some other breaks likely to be examined, with
Congressional Research Service estimates of how much money each
one annually costs U.S. taxpayers:
– Tax deferral for banks’ foreign financing income, $5
billion
– Depreciation break for restaurant and retail improvements,
$3 billion
– Incentives for certain alcohol fuels, $5 billion
– Subsidy to Puerto Rico and the Virgin Islands to spur
economic development which is shared with companies including
Diageo, which sells Captain Morgan’s rum and other spirits, $13
million
— Seven-year cost recovery period for motorsport racing
facilities, $29 million
Tax breaks like these riddle the U.S. tax code and make many
lawmakers want to tear up the code and start fresh. But that
project is a big one and may not begin until 2013.
In the interim, the presidential and congressional elections
coming up in 28 weeks will largely set Congress’ agenda,
including the contours of a complete revamp of the tax code.
(Additional reporting by Patrick Temple-West; Editing by Kevin
Drawbaugh and Doina Chiacu)
