Senate Democrats Ask for Extenders to be Offset
Last week Senators Tammy Baldwin (D-WI), Sheldon Whitehouse (D-RI), Jack Reed (D-RI), Angus King (I-ME), and Elizabeth Warren (D-MA), sent a letter to Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) making the argument that tax extenders legislation should be paid for by closing tax loopholes.
This excerpt captures the argument of the letter spearheaded by Sen. Baldwin (full letter here):
Last month, Republicans and Democrats were able to come together in a bipartisan manner to pass legislation preventing harmful cuts to federal programs for two years. However, that legislation also included a variety of spending cuts and revenue increases to ensure that the federal spending would not add to the deficit. Therefore, extending expired tax breaks, or making them permanent, without offsetting the cost is a troubling double standard whereby tax cuts and credits don’t need to be paid for but investments in education, job training, infrastructure, research and innovation must be paid for. Not requiring the same standard for these mostly business tax cuts is not only unfair, it would also add to the deficit and increase pressure to make additional cuts to domestic programs.
Instead of passing tax cuts and credits that increase the deficit, we urge you to offset the cost of extenders by closing loopholes in the tax code.
The letter goes on to identify some specific offsets, two of which we included in our PREP Plan: closing the carried interest loophole and tightening the limit on deductions for executive compensation. The letter mentions the Baldwin's Carried Interest Fairness Act, which we wrote about previously.
The Senators are correct to demand that tax extenders be paid for, and we commend them for putting forward specific suggestions. As we wrote recently in Seven Reasons to Pay for Tax Extenders, these tax breaks should be offset. In addition, any extenders bill should set the stage for tax reform in the future, instead of undermining it.