Sen. Max Baucus (D-Mont.) unveiled the latest package in a series of proposals to overhaul America’s tax code. As part of the proposal, the Senator released a discussion draft on energy tax reform and said he aims to “focus on streamlining energy tax incentives so they are more predictable and technology-neutral."
The discussion draft for transportation fuels proposes replacing numerous energy tax breaks in current code, both fossil or renewable fuel related, with a technology-neutral tax credit for domestic production in 2017. The level of incentive with the credit would be based on improving greenhouse gas levels as determined by the EPA.
To help companies transition to the new system, the proposal calls for extending current credits, including the biodiesel blender credit set to expire at the end of the year, through 2016. Streamlining these tax provisions would help the committee's ability to lower the top corporate tax rate, which is currently at 35 percent, Baucus said.
Many in Washington are speculating that Baucus’s work on tax reform could be reduced due to President Obama’s announcement that he would like to nominate the Senator as the next Ambassador to China. Many believe Obama’s announcement could hurt the prospects of moving tax reform in the coming year, especially if Baucus departs from office abruptly.
If tax reform negotiations stall in 2014, there is an increased likelihood that lawmakers will instead begin to talk about a more traditional tax extender package.
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