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Tax Extenders Legislation on the Brink

Remember those ads depicting Congress kicking a can down the street? It’s looking a lot like we’ll be playing kick the can again on tax extenders legislation this fall, following a veto threat from President Obama last week.

The President said he would veto a $450 billion package of tax provisions that had been negotiated with Senator Harry Reid (D, NV), legislation that would have made many tax provisions permanent, but the House is continuing to work toward a one-time one-year extension of about 50 tax incentives and subsidies.

Congress and presidents since the 1980’s have been reauthorizing many of these tax breaks, and the latest House vote would have an almost $45 billion price tag over the next ten years if carried forward.

The House voted overwhelmingly (378-46) on Wednesday on a one-year tax extenders package, which includes credits for energy efficiency and alternative fuels along with a variety of business and individual tax breaks as well as a one year extension of the Production Tax Credit sought by the wind energy industry. The extensions, however will expire on December 31, 2014, thus setting the stage for another round of either comprehensive reform or slow approvals in the 114th Congress.

The bill was delayed by a battle between the Congress and the White House which said it would veto a multiyear tax package. House conservatives rebelled against the deal, but House Democrats joined the majority of the Republicans in voting for the plan. Both parties’ leaders continue to talk about a more inclusive, multiyear reform plan for the next session.

Wind energy advocates, including AWEA said the extension of the PTC through December 31 does not provide either certainty or stability to keep factories open. When the PTC was allowed to expire in 2012, AWEA says, 30,000 workers were lost and $23 billion in private investment.

The Rules Committee put a closed rule on the package, H.R. 5771, which meant only one amendment was considered – that amendment would add a one-year extension for a credit for alternative fuel vehicle refueling property.

In the Senate, Reid didn’t offer hope for that chamber to act on the House legislation. “Let’s see what they send us, what’s in it, and we’ll make that decision then,” he said “We’ll see what else they have in it other than the one year extension.”

The intense lobbying over the wind PTC has jeopardized the dozens of other tax breaks in the legislation, as often happens when a key issue is included with many others on a Congressional bill. Governors from “wind” states, and a coalition of energy and environmental groups are pushing for the PTC and multi-year extensions, while other groups like the Americans for Prosperity are hotly opposed to extension of the wind credit.