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You won't believe what's in the Senate's fiscal deal...

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Even as Washington says it wants to eliminate the tax credits and loopholes that litter the tax code, the “fiscal cliff” deal that Congress is poised to pass is filled with dozens of them.

Tax deductions for college tuition and teachers’ classroom supplies, tax credits for adoptions, and special breaks for businesses that train rescue crews to respond to mine cave-ins are only a few of the giveaways that were criticized by both sides going into negotiations.

Even as he called on Congress to go after “loopholes and deductions that aren’t available to most,” Mr. Obama on Monday touted tax breaks that he fought to keep in the agreement.

“It would extend our tuition tax credit that’s helped millions of families pay for college,” he said. “It would extend tax credits for clean-energy companies that are creating jobs and reducing our dependence on foreign oil.”

Tax breaks have been prime targets in deficit talks for the past three years, and critics say their elimination is the fairest way to broaden the tax base.

In 2010, the Bowles-Simpson deficit commission recommended culling many of the deductions and tax breaks and using the revenue to reduce the deficit and bring down marginal tax rates.

During the presidential campaign last year, Republican nominee Mitt Romney based his economic plan on a broad but vague pledge to cut many of the loopholes and use that money to lower tax rates across the board. Mr. Obama campaigned on ending the loopholes and using that money to reduce the deficit.

This week’s agreement, however, deepens the deficit and extends tens of billions of dollars worth of deductions and tax credits that have deep support on both sides of the aisle, making them difficult to cull.

Among the breaks in the deal are several tax cuts to boost biofuels and other renewable energy, at a cost of more than $18 billion over the next decade; tax credits for adoption, valued at $759 million; a $10,000 tax credit for training mine rescue teams, expected to cost the government $5 million; and a credit for businesses to offset the salaries they pay to members of the military reserves who are called up for active duty.

One of the more contentious breaks is $200 million to continue the “cover over” subsidy paid to Puerto Rico and the Virgin Islands for their rum industries.

Read more via The Washington Times...

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