Tax News

CCH (cch.taxgroup.com) reports:

Senate Republicans on December 13 effectively stripped a $21.8-billion tax title from a comprehensive energy bill (HR 6) by thwarting Senate Democratic Leader Harry Reid's, D-Nev., attempt to limit debate on the provisions in order to prevent a filibuster. The cloture vote, which requires 60 votes for approval, fell short by one vote, 59 to 40. The Senate plans to take up the energy bill immediately without the tax provisions. It is expected to pass by an overwhelming margin and House Speaker Nancy Pelosi, D-Calif., has indicated her chamber will follow suit.
President Bush and Senate Republicans primarily opposed the tax package because of revenue offsets affecting the oil and gas industry that would repeal the domestic manufacturing incentive for the top five integrated producers and tighten rules governing the payment of taxes by oil and gas producers on foreign-earned income. While there are no stated plans to revive the tax provisions before the session ends, Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Charles E. Grassley, R-Iowa have previously indicated that such measures could reappear as a stand-alone measure or attached to must-pass legislation.
Reid said on the Senate floor prior to the cloture vote that, by eliminating the tax breaks for the oil industry, Congress would have funds to invest in clean energy and provide for the Secure Rural Schools program, as well as at least one-year full funding for the Payments in Lieu of Taxes program. Sen. Pete Domenici, R-N.M., ranking member on the Senate Committee on Environment and Natural Resources, saw the outcome differently."By rejecting the nearly $22 billion in tax increases added to this bill, the Senate will instead go back to work on a package that contains the right priorities and can be signed into law," he said in a prepared statement.
President Bush on December 13 said he would sign energy legislation if the Senate version reaches his desk. Bush, in a written statement, said the Senate energy plan would improve U.S. economic and energy security. The plan contains stricter CAFE standards than the administration wanted but the provision was not a deal breaker. What remains to be seen is the final House version and whether it will contain tax offsets. The White House remains firmly opposed to any tax increase to fund tax cut provisions. To date any bills that raise taxes have drawn a veto threat.
By Jeff Carlson and Paula Cruickshank, CCH News Staff
Joint Committee on Taxation Estimated Budget Effects of Titles I and XV of a Proposed Amendment to HR 6, the Clean Renewable Energy and Conservation Act of 2007, JCX-115-07
Statement of Administration Policy on HR 6