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Tuesday, November 25, 2014

Veto threat derails tax deal

Veto threat derails tax deal
By Bernie Becker - 11-25-14 14:46 PM EST

The White House on Tuesday threatened to veto an emerging deal that would restore several lapsed tax breaks for good.

“The president would veto the proposed deal because it would provide permanent tax breaks to help well-connected corporations while neglecting working families,” Jennifer Friedman, a White House spokeswoman, said in a statement.

Negotiators had hoped to wrap up the deal, hashed out largely by Senate Majority Leader Harry Reid (D-Nev.) and House Ways and Means Chairman Dave Camp (R-Mich.), as soon as Tuesday.

But the White House veto threat upended those talks, underscoring that both President Obama and House Democrats had some problems with the agreement that Reid was negotiating. One Capitol Hill aide said Tuesday that a deal was no longer closer at hand.

The bill that was being discussed would cost in the neighborhood of $450 billion and restore some priorities for both Republicans and Democrats without an expiration date.

More than 50 tax breaks, commonly known as extenders, expired at the end of 2013, and lawmakers have been discussing whether some of those should be made part of the tax code for good.

The popular credit for business research and a provision that allows businesses to write off expenses more quickly would both get long-term extensions under the agreement. House Republicans voted this year to extend both those provisions for good and to expand the research credit, ideas that also have some support on the Democratic side of the aisle.

Under the emerging deal, largely being hashed out by Senate Majority Leader Harry Reid (D-Nev.) and House Ways and Means Chairman Dave Camp (R-Mich.), a production tax credit favored by the wind industry and largely opposed by Republicans would be phased out.

For Democrats, the deal includes indefinite extensions of both a tax break that helps families with college costs and another that helps commuting workers pay to ride mass transit.

Sen. Charles Schumer (D-N.Y.) is a big proponent of both those preferences. An incentive that allows taxpayers to deduct state and local sales taxes, which Reid has long backed, would also be restored for the long haul.

Most of the rest of the tax breaks that expired at the end of last year would be extended through 2015 under the deal, as they were in a bipartisan package that passed the Senate Finance Committee earlier this year.

Tax breaks that help charities and S corporations — businesses that pay taxes through the individual code — would also be extended for the long haul under the deal. The legislation could also include some new provisions that aren’t already in the tax code, including a proposal that allows people with disabilities to set up tax-free savings accounts.

Negotiators are still trying to wrap up the final deal, and could help stave off delays to the upcoming tax filing season if they finish it off quickly. John Koskinen, the IRS commissioner, has said tax refunds could be delayed if an extenders deal wasn’t passed by the end of November.

Lawmakers won’t return to Washington until December, but the tax break deal is already running into some trouble among Democrats.

“It’s completely fiscally irresponsible. It’s a hodgepodge of giveaways to corporate special interests,” one Democratic staffer told The Hill. “This is a terrible deal for Democrats.”

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