As President Obama prepares to meet with some of the nation’s top business leaders Wednesday, he’s divided with top Senate Democrats over tax-cut legislation that is viewed by many industry chiefs as crucial to continued job growth.
The president will address the Business Roundtable in Washington, a powerful group that renewed its call Tuesday for the administration and Congress to work together in the lame-duck session on a variety of pro-growth proposals, including the renewal of a string of expiring tax breaks for businesses and individuals.
Randall Stephenson, chairman of the BRT and CEO of AT&T Inc., said the corporate chiefs will press Mr. Obama and congressional leaders to approve the package of tax breaks known as “extenders” to “avoid a big tax increase that is facing corporate America.”
“That’s really, really important,” Mr. Stephenson told reporters. “We hope to convey our sense of urgency.”
The House is preparing to vote this week to extend nearly all of the lapsed tax breaks only through the 2014 tax year, after a bipartisan proposal for a longer extension fell apart last week. That tentative agreement, which had the support of Democrats Senate Majority Leader Harry Reid of Nevada and Sen. Charles E. Schumer of New York, would have made permanent some major business tax breaks, including the research-and-development tax credit and increased write-offs for small businesses, and locked in other breaks through 2015.
But the deal collapsed when the White House threatened to veto the package, saying it was too heavy on benefits for corporate America and too light on tax breaks for low-income workers and middle-class families. White House press secretary Josh Earnest repeated those concerns Tuesday.
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“The president thinks that an approach like that is both unfair and bad economic policy,” Mr. Earnest said of last week’s Senate proposal. “We’re hopeful that we’ll be able to come up with something that we believe is good for middle-class families.”
Mr. Obama threatened to veto the deal because it didn’t extend the child tax credit and earned-income tax credit, which are due to expire at the end of 2017. In a closed-door meeting Tuesday with House Democrats, Treasury Secretary Jack Lew said the administration is “open to supporting shorter-term” deals than last week’s proposal.
Mr. Lew “underscored the administration’s strong preference for a tax-extender agreement that both addresses the needs of working families and is fiscally responsible,” the Treasury Department said.
Curtis Dubay, a specialist on tax policy at the conservative-leaning Heritage Foundation, said the administration’s emphasis on the earned-income and the child tax credit make little sense because those provisions are locked in for the next three years.
“To blow this deal up for something that’s three or four years off is perplexing,” he said. “Now the bill will move rightward. The Democrats in Congress are not going to get a better deal.”
Mr. Dubay also challenged the argument that the failed Senate deal was tilted too heavily toward corporations.
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“There’s lots of things in the package that benefit low-income people,” he said. “New market tax credits, low-income housing credits — there are lots of things that are directly [aimed] to benefit the low-income. It’s not just a business tax package.”
Other features included the ability for multinational corporations to defer U.S. taxes on certain overseas financing income; a production tax credit for wind energy; and a provision allowing some taxpayers to immediately deduct up to $500,000 of asset acquisitions.
The president and many Democratic lawmakers have been pushing for the earned-income and child tax credits by pointing to an estimate by the liberal Center on Budget and Policy Priorities that more than 50 million Americans would lose part or all of their ability to claim the credits if they expire in 2018.
Mr. Reid was willing to jettison those extensions, for now, if the package included an extension of the tax credit for people to deduct sales taxes in states where there is no income tax (such as his home state of Nevada). Mr. Schumer was interested in extending a tax credit for mass transit commuters, of great interest in New York.
Some advocacy groups are urging Congress to reject the new House legislation, saying it contains offshore loopholes that would allow corporations to avoid paying billions in taxes.
“When Congress incentivizes corporations to continue avoiding their taxes by manipulating their tax bills, average American taxpayers have to pick up the tab in the form of cuts to public programs, higher taxes, and more debt,” said Jaimie Woo, tax and budget advocate for U.S. Public Interest Research Group.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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