Prior to its adjournment for summer recess, the Senate Finance Committee approved the extension of almost 100 specific tax breaks and benefits. “The Family and Business Tax Cut Certainty Act of 2012” was reported out of the Committee with bipartisan support and renews or extends provisions such as the alternative minimum tax, the deduction for state and local sales taxes, the research and development credit and a series of energy-related provisions (see below). It is possible that the full Senate will begin to consider the legislation in September, prior to the next recess scheduled for the first week of October that will run through the November elections, but no final action will take place until after the elections in what promises to be a very busy Lame Duck session. Senior members of the House Ways and Means Committee have noted their legislation will not be ready until after the elections. (See Joint Committee on Taxation Analysis of the tax extenders considered in “The Family and Business Tax Cut Certainty Act of 2012.”
The Senate Finance Committee Extends Energy Tax Provisions
Included as part of the expired and expiring tax provisions renewed in “The Family and Business Tax Cut Certainty Act of 2012” were a number of energy-related tax provisions. These provisions included credits for the production of cellulosic biofuel, extension of credits for biodiesel and renewable diesel, credit for the construction of energy-efficient new homes, incentives for alternative fuel and alternative fuel mixtures as well as an extension of the production tax credit ("PTC") for the wind power industry.
Exemplifying the debate in Washington over when and how to phase out government support, the PTC was not included as part of the original bill proposed by Senate Finance Committee Chairman Max Baucus (D-MT), but was unveiled as a modification just prior to the committee meeting. Some have suggested that this last minute inclusion was done to appease Republicans who support the PTC but did not want to embarrass other committee Republicans who were aligned with Republican Presidential candidate Mitt Romney, who opposes a continuation of the credit. Notwithstanding Romney’s position, PTC enjoys bipartisan, bicameral support and will certainly be extended if the broader tax extender legislation moves forward in the Lame Duck session.
The PTC extension is estimated to cost approximately $12 billion over ten years. In total the legislation includes about $18 billion in energy-related tax provisions over 10 years. Again, it is unlikely that this legislation will pass prior to the adjournment for the election scheduled for early October, but the exercise, which was termed a “dry run,” portends well for the legislation when and if tax provisions such as the expiring Bush tax cuts are considered prior to January 2013.