CQ TODAY - BUDGET
GOP Struggling to
Advance Tax Cut Agenda
By Joseph
J. Schatz, CQ Staff
Republican leaders plan to bring a
revised package of Gulf Coast tax
incentives to the House floor Wednesday,
but the bill's denial of benefits to
casinos, massage parlors, tanning salons
and racetracks has drawn a rebuke from a
Mississippi
senator and raised concerns at the White
House.
The dispute
could erect another hurdle to federal
tax breaks that political and business
leaders on the
Gulf
Coast
region view as an important part of
their recovery plan.
The flap
also comes as the Republican majority
mulls whether it will have to delay
until next year final action on major
portions of its tax cutting agenda.
House
leaders are trying to shore up support
among various factions of the GOP for a
$56.1 billion tax cutting budget
reconciliation bill (HR 4297) scheduled
for a vote Thursday. But with Republican
leaders in both chambers still focused
on reaching agreement on an accompanying
package of spending cuts (S 1932),
chances are growing that a House-Senate
tax deal will slip into 2006.
The House is
also set to vote Wednesday night on
legislation (HR 4096) that would adjust
for inflation and extend through 2006 a
tax provision designed to blunt the
effect of the alternative minimum tax
(AMT) on middle-income taxpayers. The
House will also consider a bill (HR
4388) that would extend expiring tax
provisions not included in the tax
reconciliation bill. All three tax
measures will be considered under
procedures prohibiting amendments and
requiring two-thirds votes for passage.
Gulf
Coast
Tax Cuts
The tax
reconciliation bill (S 2020) passed by
the Senate Nov. 17 includes $7 billion
in tax breaks designed to stimulate
business activity on the
Gulf
Coast
region. The House has passed legislation
(HR 4337) that would provide debt relief
for hurricane-stricken local
governments.
But House
Ways and Means Chairman Bill Thomas, R-Calif.,
has kept his hurricane tax relief out of
the budget reconciliation process. And
he has delayed bringing the legislation
to the floor, in part because of
opposition from Rep. Frank R. Wolf, R-Va.,
and other GOP lawmakers who do not want
establishments such as casinos and
liquor stores to share in the tax
relief.
"Prohibiting
massage parlors, liquor stores and
casinos from getting tax breaks is not a
tough call," Wolf and more than 30 other
lawmakers wrote in a letter to House
leaders. "Legislation that does not
include the prohibitions would not be
acceptable."
The House
will vote Wednesday on a rewritten bill
(HR 4440) that includes language denying
tax benefits to private or commercial
golf courses, country clubs, massage
parlors, hot tub facilities, suntan
facilities, liquor stores and racetracks
or other facilities used for gambling.
"My personal
view of that is it was appropriate to
exempt those kinds of activities," said
House Majority Leader Roy Blunt, R-Mo.
But White
House press secretary Scott McClellan
said Tuesday that administration
officials "don't believe you can be
selective when it comes to addressing
the economic needs of the region. It
should apply equally and fairly to all
those businesses."
Trent Lott,
R-Miss., a senior member of the Senate
Finance Committee, was more direct.
"To reject
legitimate businesses from providing
good jobs to a state's disaster victims
would set a serious precedent in
disaster relief funding," Lott said in a
statement Tuesday. "I cannot recall the
Congress ever discriminating against
legal businesses in the dissemination of
disaster relief - not against gaming
establishments, not against businesses
which sell tobacco products."
While Senate
Finance Chairman Charles E. Grassley,
R-Iowa, included $7 billion in
Gulf
Coast
tax breaks in his reconciliation tax
bill, Senate tax writers have been
considering moving a stand-alone package
as well to expedite action and strike a
bicameral deal before the holiday
recess.
But that
plan would require a bipartisan
agreement in the Senate on the
parameters of such a bill. And if Lott
and the White House oppose the
limitations imposed by the House bill,
that could make a final agreement by
year-end even more difficult.
According to
one House Republican aide, the hurricane
tax relief bill is aimed in part at
providing political cover to GOP
moderates wary of supporting the tax
cutting reconciliation bill, which would
extend for two years the current reduced
income tax rate for capital gains and
dividends. But Blunt disavowed such a
strategy.
While the
Senate-passed tax reconciliation bill
includes an AMT "patch" similar to the
one the House will consider, Senate
leaders are mulling whether to move
their own stand-alone AMT bill to
improve chances that Congress will send
the president an AMT bill before the end
of the year.
"When it
comes to process, the Senate hasn't
ruled anything in or out on keeping the
economy growing, protecting the middle
class from the tax squeeze, and helping
the Gulf region recover and prosper,"
said Eric Ueland, chief of staff to
Senate Majority Leader Bill Frist, R-Tenn.
"We will see what the House does and
when, and take it from there."
Forging
ahead with an AMT bill in the Senate
would provide an opportunity for
Democratic amendments, a prospect that
worries some GOP leaders. Although tax
writers could extend the AMT provision
retroactively if final action slips into
2006, there may be political pressure to
act this year and to avoid confusing
taxpayers.
Indeed,
Democrats are slamming GOP leaders for
proposing only a one-year extension of
AMT relief. "Extending the AMT well into
the future would bring real tax relief.
Today's charade just proves that the
Republican majority is out of touch with
the majority of American taxpayers and
has no desire to provide assistance to
those most in need," Ellen O. Tauscher,
D-Calif., chairwoman of the New Democrat
Coalition, said in a statement.
The
last-minute changes in the hurricane tax
bill may gain GOP leaders some votes for
their tax reconciliation package
Thursday, but it remains unclear if
enough moderate Republicans are on board
to win passage of the extension package.
Sarah
Chamberlain Resnick, executive director
of the Republican Main Street
Partnership, a group of moderate
Republicans, said Tuesday that 21
moderates who are undecided on the tax
bill will meet Wednesday. "We're going
to end up with a significant impact on
this one," she said. "Right now, [GOP
leaders] don't have the votes."
Susan
Ferrechio and Martin Kady II contributed
to this story.
