The U.S. Senate’s top Democratic and Republican tax law writers on Wednesday both urged colleagues to renew a set of expired federal tax breaks, many of which support renewable energy.
Known as “extenders” and regularly renewed in past years, the package of more than 50 “temporary” provisions expired at the end of 2013, rattling industries that benefit from them.
The Senate Finance Committee in April passed legislation to keep the tax breaks alive through 2015, but the measure got bogged down in partisan squabbling earlier this year.
The committee’s leaders said they hope the renewal legislation will be affirmed soon.
“We need to set partisanship and political gamesmanship aside and get the extenders package across the finish line as soon as possible,” said Republican Senator Orrin Hatch.
Also speaking at a hearing on energy tax policy, Democratic committee Chairman Ron Wyden agreed that lawmakers need “to get this extender package passed and signed into law.”
The Senate is due to wrap up its work on Thursday and not return until after midterm congressional elections in November.
The $85 billion in tax breaks include a range of special interest measures, including aid for wind energy, biodiesel, plug-in vehicles, auto race tracks and horse-breeders.
“We are optimistic that Congress will pass tax extenders,” said David Ward, spokesman for the American Wind Energy Association.
But the question of how best to tax the national energy sector will likely carry over into the next Congress, particularly if Democrats retain control of the Senate and Wyden remains leader of the finance committee.
Carbon dioxide – a byproduct of fossil fuel consumption – is driving climate change, but current tax law does nothing to discourage its damaging effects, Wyden said at the hearing.
“For the first time, the tax code must take the costs and benefits of energy sources into account,” he said.
A $20-per-ton levy on carbon dioxide would generate roughly $100 billion in annual tax receipts and permit cuts in other areas like taxes on corporate income, said Gilbert Metcalf, a professor of economics at Tufts University.
“Carbon revenue provides fiscal flexibility… while maintaining overall budget neutrality,” he told the hearing.
But Wyden would have to overcome broad Republican opposition to a carbon tax if the idea were to gain momentum.
Hatch dismissed the idea as too damaging to the economy.
“If we purposefully enact policies to make energy … more expensive, American businesses and jobs will go to China, India, and elsewhere,” he said. (Additional reporting by Richard Cowan; Editing by Kevin Drawbaugh and Dan Grebler)