Senate panel OKs less 'perk'-y tax reform

WASHINGTON, Aug. 3 (UPI) -- The Senate Finance Committee's foray into changing the U.S. Tax Code started with either a bang or a whimper, depending on who's providing the review.

Committee members noted the panel didn't automatically renew all of the loopholes and tax perks as has been their wont for decades, but a watchdog group said the action taken wasn't bold enough, The Washington Post reported.

"The opening salvo of tax reform was little more than a whimper," said Steve Ellis, vice president of Taxpayers for Common Sense. "If this is as bold as they're going to go, it doesn't bode very well for fundamental reform."

Committee leaders, on the other hand, noted that the 19-5 vote showed an ability to cross party lines at a time when bipartisanship is a rarity.

"By doing this, we've come a long way toward functionality," said Sen. Orrin Hatch, R-Utah, the committee's ranking Republican. "This is a major achievement. It certainly is not tax reform. But ... it's a step in the right direction."

"I'm proud of what we've done as a committee," Finance Committee Chairman Max Baucus, D-Mont., said, noting the action was "more than baby steps. ... We're walking."

The committee agreed to shed 20 of 75 special-interest tax breaks, including a $5,000 credit for first-time home buyers in the District of Columbia and an incentive program for wind-energy projects that has been viewed as benefiting foreign companies.

Among the business tax perks remaining are an accelerated write-off for NASCAR track owners and an economic development credit for a StarKist tuna cannery in American Samoa.

The Senate package also includes a credit for domestic research and development and the popular college tuition deduction, as well as a provision that would shield millions of middle-class families from the alternative minimum tax through 2013.

The full Senate won't take up the measure until at least September. If it passes, the plan would face uncertainty in the House, where the Ways and Means Committee is also reviewing the temporary tax breaks, commonly called "tax extenders" because they are not permanent, the Post said.

Official estimates indicate the Senate measure would add $143 billion to next year's budget deficit, with about $40 billion going to the special-interest breaks. The cost would rise to $205 billion over a 10-year period.

Conservatives, however, are disappointed with the first effort and singled out Hatch, who was targeted by the Tea Party movement in the Utah party primaries, Politico said.

"It's a shame, yet predictable, that Orrin Hatch would eschew his cathartic conversion to conservatism," Daniel Horowitz posted on RedState.com, a conservative Web site. "His overarching selling point for giving him one more term was his promise to bring the glory back to conservatives as chairman of the Finance Committee. Well, now we're getting a taste of what to expect next year."

Sen. Pat Toomey, R-Pa., a leader among freshman conservatives, said he hadn't yet studied the overall package, but told Politico, "I am not in favor of using the Tax Code to subsidize business activities."