Senate tax-writers to eye U.S. tax loopholes and more
By Kim Dixon
WASHINGTON (Reuters) - The top Democratic and Republican tax writers in the U.S. Senate will within weeks begin circulating concrete ideas for revamping the U.S. tax code to try to kick-start legislation for this year, a Senate committee aide said on Tuesday.
The aide, who asked not to be identified, said this preliminary attempt would focus on hot topics such as curbing tax "loopholes" that sap revenues at a time of high federal budget deficits and potential tax changes for small businesses.
The ideas are being developed for debate by the Senate Finance Committee, in charge of tax policy in that body. A U.S. House of Representatives panel is working on a parallel track.
"There is a lot of heavy policy lifting going on behind the scenes," said Chris Krueger, an analyst for investors at Guggenheim Securities. The goal is to have proposals "to be pushed out once the political window opens."
That window could open when the government runs out of its borrowing authority and hits the "debt ceiling" in May, a deadline that could force lawmakers to act.
Democrats and Republicans alike both decry curbing tax loopholes, though they disagree on what constitutes one. Democrats typically point to tax breaks for oil companies and private equity managers, while Republicans talk about a broad scale tax overhaul to look at the code more comprehensively and are less likely to get specific.
More popular tax breaks run the gamut from mortgage interest to charitable donations.
In January, lawmakers voted to extend the so-called "debt ceiling" to May 19, as Republicans gave in on a key concession of demanding new taxes.
The U.S. Treasury can then use accounting maneuvers that will allow the government to continue borrowing funds. But that is temporary and Republicans say they will demand spending cuts to raise the borrowing limit again.
Staff to Senate Finance Committee Chairman Max Baucus and the panel's top Republican, Orrin Hatch, are working in a rare bipartisan fashion to produce the tax reform papers, the aide said.
With most Democrats and Republicans squabbling over the automatic spending cuts and legislation to keep the government running, the lawmakers are swimming against the tide in seeking a tax overhaul this year.
It is a delicate political balance for Democrat Baucus, who is up for re-election in 2014 and hails from Montana, a Republican-dominated state.
Baucus is also working with House Ways and Means Committee Chairman Dave Camp, a Republican. The two meet weekly to update each other on progress, another rare bipartisan effort.
A Republican aide to a lawmaker on the House Ways and Means Committee acknowledged that leadership in both chambers has not fully embraced tax reform as a top priority this year.
Camp in recent weeks established committee "working groups" on topics from financial products to real estate taxation to generate ideas in case a deal emerges.
Since the groups were established, lobbying activity has increased significantly, according to lawmakers and aides.
"We want to be cognizant of the fact that these debt limit discussions, or any of these (budget) discussions can turn in a heartbeat and be a vehicle" for tax reform legislation, the Republican aide said.
(Reporting by Kim Dixon; Editing by Doina Chiacu and Cynthia Osterman)
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