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Grassley Starts Congressional Turf War Over Tax Cuts

by Leroy Baker,, New York

18 May 2007

Senator Chuck Grassley, ranking member of the Committee on Finance, has expressed strong objection to the inclusion of small business tax provisions in the supplemental spending bill under development by appropriators.

Grassley said that tax policies are solely the Finance Committee’s jurisdiction, and he objects to the inclusion of those items in a spending bill without the Finance Committee’s direct involvement.

"We should rarely mix the jurisdiction of the two great money committees," Grassley wrote in a letter to Robert C. Byrd and Thad Cochran, respectively Chairman and ranking member of the Senate Appropriations Committee.

"It should only occur, if at all, when the four senior members of the tax writing and appropriations committees agree. Mixing tax writing and appropriations jurisdiction should not occur at the whim of leadership. Those kinds of actions demean the committees. Fortunately, I insisted and the leadership respected this division of jurisdiction between the tax writers and appropriators over the last six years," he added.

Almost $5 billion in tax relief for small businesses affected by the proposed increase in the federal minimum wage (to $7.25 per hour from the current $5.15 per hour) was contained in the Iraq war supplemental spending bill vetoed by President Bush earlier this month. Among other provisions, the tax package would have extended the Work Opportunity Tax Credit (WOTC) for 3 1/2 years and increased the 179 expensing limit to $125,000. However, this was substantially less in tax relief than initially agreed by the Senate and Grassley said that the Finance Committee's influence over the legislation was undermined because the bill fell out of its jurisdiction.

"Chairman Baucus was able to accommodate far less than half the tax policy the Senate sent to conference. The Senate’s authority was limited by the Leadership decision to attach the bill to the supplemental appropriations bill where Chairman Baucus was not a conferee. Legitimate tax policy proposals on the revenue losing and revenue raising sides were left on the conference’s cutting room floor," Grassley wrote.

"The composition of the final package is heavily weighted towards an extension and modification of the work opportunity tax credit. I support that credit. But the benefits of that policy are delayed. Small businesses need the tax relief to be in synch with the time the minimum wage kicks in. Both of these outcomes do not reflect a proportionate agreement between the House and Senate bills. The arbitrary ceiling on the amount of tax relief was not a fair balance," he added, concluding:

"I appreciate your Committee members’ interest in the Social Security Act programs and the Internal Revenue Code. I ask that they work with the Committee on Finance to see that their objectives are examined and addressed at the appropriate time, in the appropriate setting."

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