House Ways and Means Committee chairman Rep. Charles Rangel, D-N.Y., has introduced legislation to extend expiring tax provisions and provide tax incentives for renewable energy sources and disaster relief that contains fewer bond provisions than similar legislation approved by the Senate Tuesday.
Rangel's proposals appear in three separate bills, one of which would provide a one-year "patch" to the alternative minimum tax that is not offset by revenue-raising provisions - a reversal of his previous vow to pay for the patch, bringing him in line with the AMT measure approved by the Senate. Another bill contains disaster relief measures and a third includes energy and tax extender provisions.
House members were preparing to vote on the bills as of press time yesterday.
Though the bills address similar issues, Rangel opted for a different approach on several major provisions. Most notably, while the Senate only partially offset the costs of its bill with revenue-raising provisions, Rangel's energy and extenders bill would be fully offset. While Republicans in both chambers have argued against revenue raising offsets for legislation meant to create tax breaks, some House Democrats have vowed to vote against any legislation that does not strictly adhere to pay-as-you-go budgetary rules.
"Sadly, [the Senate] did not live within their means, and their bill would add billions to the national deficit," Rangel said in a statement.
In addition, his energy bill would not provide any new authorization for clean renewable energy bonds, while the Senate bill would authorize $800 million of CREBs. Instead, the House voted on and passed a separate energy tax bill last week that would authorize $1.75 billion of the bonds, and that legislation is currently pending in the Senate.
Rangel's energy bill also contains an extension of the authority to issue qualified green building and sustainable design project bonds, and would authorize an additional $400 million of qualified zone academy bonds, same as in the legislation approved by the Senate.
But while the Senate package contained bond provisions intended to address areas hit by Midwestern floods and Hurricane Ike specifically, Rangel's disaster relief bill would instead create a national program to provide relief for federally declared disaster areas.
"This legislation provides a national, flexible package of economic recovery incentives," he said, noting that few areas hit by natural disasters in recent years have received tax relief aid. The tax provisions in the disaster relief bill would last for three years.
Under the legislation, several tax breaks would go into effect as soon as an area is declared a federal disaster area, including a relaxation of mortgage revenue bond rules that would allow state and local governments to issue private-activity bonds to finance the repair or reconstruction of single- or multifamily homes hit by the disaster. Normally, MRBs can only be issued to give loans to first-time home-buyers or to build multifamily rental housing complexes. The Senate extenders package contains similar provisions for victims of flooding and Hurricane Ike.
Rangel's disaster relief bill also would give the Treasury secretary the authority to allow for the state and local issuance of an additional $13 billion of private-activity bonds to finance the replacement, repair, reconstruction, or renovation of businesses damaged or destroyed as a result of a federally declared disaster. In determining allocations, the secretary would give priority to the areas with the greatest business losses.
Rangel's AMT proposal marks a reversal from his previous position on the tax, when he pushed a fully-offset patch through his committee in June, despite repeated protests from Republican colleagues. That bill eventually was passed by the House but languished in the Senate.
Iowa Republican Sen. Chuck Grassley, who serves as the ranking minority member of the Senate Finance Committee, criticized the House yesterday for altering the Senate package, saying: "The House is trying to play games with extenders and tax relief."
Meanwhile, the Bush administration threw its support behind the Senate package in a statement of administration policy Tuesday, despite noting that it disagreed with several provisions in the package, including those authorizing tax credit bonds.