HELENA – Sen. Max Baucus, D-Mont., on Thursday defended the slew of corporate and personal tax credits stuffed into the “fiscal cliff” legislation last week, saying it was a bipartisan package worked out last summer.
Baucus, speaking to reporters after he addressed the Montana Legislature, said the Senate Finance Committee, which he chairs, actually voted to get rid of some tax credits while it agreed to support extending many others.
“I got the committee together, Republicans and Democrats, and said let’s work together and said, ‘We’ve got to get rid of these,’ ” he said. “That was a package that included tens of billions of dollars in reductions (of tax credits) over a 10-year period.”
But the package also extended for a year about 50 tax credits, estimated to cost the U.S. Treasury some $64 billion.
The tax credits benefited families with children, families with kids in college, low-income families and businesses that hire veterans.
But they also included things like the “active financing exception,” which allows businesses that earn interest on overseas lending to defer taxes on those earnings indefinitely. Corporate giants like General Electric and Citigroup are big beneficiaries.
Other recipients of extended tax breaks included new auto racetracks, rum-makers in Puerto Rico, biodiesel producers, film studios and, more closer to home in Montana, wind-energy projects.
The tax breaks, included in the bill that froze federal income-tax rates for most citizens, raised rates on income over $400,000 and raised Social Security payroll taxes, have come under scrutiny and criticism in recent days in news outlets like the Los Angeles Times, the Huffington Post and the Chicago Tribune.
The Senate Finance Committee met last August and put together the package and approved it on a 19-5 vote. The legislation didn’t move at that time, because the Republican-controlled House wasn’t expected to approve it.
However, it made it into the fiscal-cliff legislation last week, apparently supported by the White House.
Baucus said Thursday there are some credits in the package that “I’m not happy with,” but declined to say which ones.
He noted that many of the credits have been on the books for years – “this is nothing new” – and said those that were extended for another year will likely face scrutiny when and if Congress tackles broader federal tax reform this year.
“The main thing is to keep our eye on the ball here,” he said, noting the positive elements of the fiscal-cliff legislation, such as making permanent the current income-tax rates for most citizens and a high exemption on estate income.
Baucus also defended the bill’s increase of Social Security payroll taxes to the same level as two years ago.
“It’s a tradeoff,” he said. “Most Montanans want a strong Social Security Trust Fund, too. … To keep the solvency of the Social Security Trust Fund, it’s important to keep that tax.”