Legislative Christmas Tree 2010

We have talked a lot in recent days about the White House possibly accepting a deal that extends all current tax rates in exchange for a series of other items.  That list is not small.

And that's why I wonder if we are really watching the birth of the 2010 version of the Legislative Christmas Tree in the Congress right now.

As negotiators look for a deal on the tax rate issue, the two sides have spelled out their desires for some time.

Republicans have said they want all of the Bush tax cuts made permanent, while Democrats have said taxes should go up for those in top income brackets.

Senators in both parties say the White House is now ready to accept an extension of all of the Bush-era tax rates, in exchange for a one year extension of long term extended jobless benefits.

Yes, those would be the same benefits that Republicans have repeatedly blocked this year, and which started running out last week, because the GOP wants them paid for with offsetting budget cuts.

Would they still go to the mat and demand that kind of budget austerity if they get a two year extension of the Bush tax cuts?  

It's something to chew on.

But those two items are not the only things that might be part of this deal.

"I'm going to be rolling up my sleeves with the leaders in both parties in Congress. We need to get this resolved," said President Obama, who vowed on Saturday to work out a deal and tax cuts.

And more.

Why do I keep saying more?  Because there is a lot more that Democrats want to get done in terms of tax policy.

And that, in turn, could lead to a Legislative Christmas Tree.

There is talk of including a patch on the Alternative Minimum Tax, to avoid handing 20 million Americans a higher tax bill.

Some want changes on federal inheritance taxes, which hit zero this year and snap back on January 1 to their level in 2001.

The White House also wants to continue what's known as the "Making Work Pay" tax credit - this would be the tax relief from the economic stimulus that so many people tell me was a figment of my imagination - which is worth $800 for a married couple.

And there are also a slew of other tax provisions in the stimulus that expire at the end of this month.

There's also the "tax extenders" package, which covers everything from Research & Development tax credits for businesses to giving people the right to write off their state and local sales taxes on their federal tax forms, if they live in a state that does not have a state income tax.

Right now, any lobbyist worth his or her salt realizes that this Bush tax rates package might just be the last train out of town this year - and if they have a tax or budget issue they want enacted - it must get in this bill.

Like Sen. Charles Grassley (R-IA) who is battling to extend tax incentives for US produced ethanol.  Those tax incentives run out at the end of the year.

"A repeal of the ethanol tax incentive is a tax increase that will surely be passed on to the American consumer," Grassley said last week.

Most of us wouldn't know that there is a 54-cent-per-gallon tariff on ethanol imports and a 45 cent-per-gallon subsidy for producers who blend ethanol into gasoline.

Also working hard to extend tax breaks in this tax package, the solar and wind power industries, which would also like some favorable language tucked into that tax rate bill.

Are you starting to see what might develop here?  

This might not be just a bill that extends the current federal tax rates for another two years, or whatever date is agreed upon.

It's going to be a bill that extends current federal tax rates - and a LOT more.

A Legislative Christmas Tree.

The current federal income tax rates expire in 25 days.  Christmas is in 19 days. We have talked a lot in recent days about the White House possibly accepting a deal that extends all current tax rates in exchange for a series of other items.  That list is not small. And that's why I wonder if we are really watching the birth of the 2010 ...