By: Annie Russo
When Congress comes back into session next month, all eyes will be on the Senate as there is a long list of bills they have yet to consider. One of those issues gaining significant attention is the need to extend expiring tax provisions, including the extension of the relief of the Alternative Minimum Tax (AMT) on private activity bonds. According to Congressional Quarterly Today, Senate Finance Committee Chairman Max Baucus said that he intends to hold a markup on tax legislation while Senate Majority Leader Harry Reid (D-Nev.) has said that he will bring a tax package to the floor in September.
At the center of the controversy are the expiring tax provisions for individuals making $200,000 and married couples making more than $250,000 from the 2001 and 2003 tax cuts that were signed into law during the Bush Administration. In remarks made before the Center for American Progress, Treasury Secretary Timothy Geithner said that extending those cuts would “hurt” the economic recovery. Geithner made it clear that the Obama Administration did not support extending the cuts for the top 2% wage earners even on a temporary basis. However, Republicans and some senior Senate Democrats disagree. Until Reid can get a consensus to garner the 60 votes needed for cloture, the disagreement over the extension of these specific provisions may quell Reid’s plans of bringing a tax package to the floor before the election.
The House has passed two bills that included the AMT exemption of the bonds, but the Senate has not acted on either piece of legislation. It is widely expected that Congress will pass tax legislation to address many of the expiring tax provisions before the end of the year, but the question of timing remains. If the Senate fails at passing something in September then a tax extenders package will have to wait for the Lame Duck session expected after the elections.
If the Senate Democratic Leadership sees passing a tax extenders package as important to the November elections and can muster 60 votes, Majority Leader Reid will look to pass something, even if it is a relatively small package that does not address all the expiring issues. If polls show later this month and in early September that tax legislation is not important to voters, watch for this issue to be punted until after the elections. Either way, there will likely be a showdown in the Senate over the tax extenders package pitting the Administration and top Senate Democrats against Republicans and several centrist Democrats.