WASHINGTON -- The Senate's top tax writer yesterday did not rule out passing legislation before the end of the year to extend two popular municipal bond programs and ease tax law bond curbs, but he said chances remain slim.
Sen. Lloyd Bentsen, D-Tex., told reporters that so far he has been stymied in his attempts to bring such a bill before the Senate Finance Committee, which he chairs, because of the potential for it to be loaded down with extraneous amendments.
"To get it done, you need an understanding it won't become a 'Christmas tree,'" Sen. Bentsen said. "I'm trying to get some commitments in that regard, but so far I've been unable to do so."
Congress would have to pass some kind of tax billl by the end of the year to keep alive the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds, as well as the low-income housing tax credit, all of which expire Dec. 31.
In addition to those items, municipal market participants have been waiting for Congress to pass legislation to simplify the tax code, which includes a number of measures that would ease restrictions on municipal bonds imposed in 1986.
That legislation is sponsored by Sen. Bentsen and House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill.
Some Capitol Hill watchers have suggested the recent spate of tax cut proposals by various members of Congress bodes well for the municipal bond market because a tax cut bill could provide the legislative vehicle to extend the expiring provisiions and pass the simplification measure.
But Sen. Bentsen appeared to throw cold water on that idea in discussing his own proposal for a tax cut, saying he did not expect a tax cut plan to win congressional approval before 1992.
"There's no question it would be tough to complete action on tax legislation this size this late in the year, but it's important to middle income families and to our economy that we get started," Sen. Bentsen said.
"I think you'll see us starting this debate," before Congress adjourns, he said. "Then I think you'll see us going out for the [Thanksgiving] recess" without completing action on it and remaining out of session until next year.
But one new development slightly increases the chances for a tax cut bill this year, Sen. Bentsen said. That is the upset win in Tuesday's U.S. Senate race in Peenysylvania by Democrat Harris Wofford over Republican Richard Thornburgh, former attorney general and governor of that state.
"Tuesday probably helped us on the odds," Sen. Bentsen said. "That made quite an impact" on legislators, he added.
"In Wofford's case, he was talking about middle-income tax cuts," Sen. Bentsen said. "There's a feeling there that Washington is not showing enough concern for those things that seriously concern Americans today."
Sen. Bentsen's tax-cut plan would give a $300 credit to every taxpaying family for each child. The senator also said another component of his package is a proposal he made earlier this year to expand the Individual Retirement Account.
That plan would restore the IRA tax break higher-income taxpayers lost in 1986, and would allow early withdrawals to pay for college education or buy a first home.