More tax headaches on the horizon for GOP

GOP tax writers are acknowledging that they’re far from excited to have to deal with a raft of expired tax breaks again next year.

Top Senate Democrats fought the House GOP’s plan to only restore dozens of incentives through the end of this year, after negotiations over a broader deal broke down.

But Republicans on the Ways and Means Committee are hardly claiming victory, even as they heap the blame on President Obama for scuttling a deal that would have indefinitely extended some of their favored tax incentives for businesses. The House passed its one-year plan on Wednesday and with the Senate expected to take up the deal in the coming days.

That’s because dealing with the expired tax breaks, commonly known as extenders, again next year could distract from the committee’s broader goal of overhauling the tax code.

“You certainly, at least at a minimum, want a couple years on these things,” said House Ways and Means Chairman Dave Camp (R-Mich.), who’s retiring at the end of the year.

“So it’s going to be a challenge, but we’re going to have to deal with it.”

Rep. Paul Ryan (R-Wis.), who will replace Camp atop the powerful committee, has said that he’s willing to focus on business tax reform next year, which President Obama has said is a priority.

Democrats on the Senate Finance Committee were pushing for a two-year deal to extend the preferences, which expired at the end of 2013, through 2015.

But Camp, who was negotiating the broader deal with Senate Majority Leader Harry Reid (D-Nev.), said Republicans were clear that the one-year deal was the best they could do if the broader deal broke down.

Short of a broader deal, some Republicans wanted a narrow agreement as they plan to take over full control of Congress in a matter of weeks.

A two-year deal, Camp said, would have been just “accepting Senate policy” without any of the changes Republicans were seeking. Making some of the tax breaks permanent would have also made the math of tax reform less challenging next year, when Ryan gets the gavel.

Still, Congress has revived the expired tax breaks for two years the last three times it dealt with them. And in addition to the tax breaks taking attention away from tax reform, it’s also just one more issue on the docket for Republicans next year, at a time when their leaders are trying to prove they can govern.

“That’s always hanging out there, and we know that it needs to be addressed,” said Rep. Dave Reichert (R-Wash.), who will be the head of the Ways and Means subcommittee that deals with taxes next year.

GOP tax writers do say that they hope they can dispense with the tax breaks as part of their broader efforts on tax reform. Camp eliminated most of them in his draft overhaul that was released in the winter, but gained little traction on Capitol Hill.

“That extender tail has been wagging the dog for so many years,” said Rep. Kevin Brady (Texas), another senior Republican on the Ways and Means panel. “It’s time to really focus on pro-growth tax reform.”

But Republicans also acknowledge that finding common ground with Obama on tax reform will be a challenge, even if both sides want to bring down the top corporate tax rate.

The two sides aren’t on the same page yet on which tax breaks should be scrapped or pared back to pay for lower rates. Officials in both parties also acknowledge that they’d need to make quick progress on tax reform next year for it to have a chance before the 2016 election heats up.

With all that in mind, other veterans lawmakers say they’ll be more than ready to deal once more on the temporary tax breaks.

“I’ve done it so many times that I think to know what to do,” said Sen. Orrin Hatch (Utah), the incoming chair of the Finance Committee.