TCS Action Letter: Blanket Tax Credit Extensions a Bad Deal for Taxpayers

 Blanket Tax Credit Extensions a Bad Deal for Taxpayers

March 8, 2010

Dear Senator,

Taxpayers for Common Sense Action (TCS Action) urges you to use fiscal restraint in the Tax Extenders Act of 2009, H.R. 4213. The bill includes one-year extensions for dozens of tax breaks, many of which only pad the pockets of big industry or provide special deals for risky projects that will have little or no benefit for US taxpayers. Passing this laundry list of tax breaks, year after year, with little or no debate on their merits, costs taxpayers billions.

This year, as in the past, the tax extenders bill is a conglomerate of largely unrelated provisions loaded into one massive package. Although many of these tax provisions are referred to as “extensions” or called “temporary,” in numerous cases tax breaks are renewed annually. For example, the “temporary” rum tax refund for Puerto Rico and the U.S. Virgin Islands has been in place since the earlier 1990’s. This little scrutinized provision is poised to help construct a new distillery in the Virgin Islands for the world’s largest liquor distiller, Diageo.

The bill also includes subsidies for risky and mature energy sources, including synthetic fuels as well as traditional fossil energy sources like oil and gas. Several tax breaks included in the bill provide tax breaks for biodiesel, biomass facilities, and alternative fuel and alternative fuel mixtures which include coal liquids. It also provides suspension of limitation of percentage depletion allowance for oil and gas marginal wells and credit for producing fuel from coke and coke gas. As the country grapples with how to address climate change, subsidizing these uneconomical high carbon fuels will only cost taxpayers more down the road.

As spending priorities continue to mount and the nation’s federal deficit grows, the fast-tracking of billions in tax breaks must stop. Lawmakers must trim the fat on costly provisions that have been on the books for years and address the more recent tax breaks that do little to stimulate the economy and only bring additional taxpayer liabilities in the future. A thorough review of where money is going and an analysis of whether these tax breaks are actually working is a much needed first step. Congress should thoroughly re-examine each and every one of these provisions to ensure they are necessary and appropriate. If you would like additional information please contact me at (202) 546-8500 or ryan [at] taxpayer.net.
 

Sincerely,