Behind-the-scenes bargaining between Senate Majority Leader Harry Reid and House Ways and Means Chairman Dave Camp on a bundle of about-to-expire tax breaks unraveled in part because of GOP anger at President Barack Obama's executive action on immigration,
Politico reported.
The talks, which involved the tax-writing panels in the Senate and House, were making progress on a package to renew some 55 expired tax breaks worth $450 billion in deductions — allowing teachers to claim for the purchase of school supplies, for instance — that Reid and Camp wanted in place for tax-filing season.
Democrats originally wanted to extend the Child Tax Credit and the Earned Income Tax Credit, a wage supplement for the working poor, due to expire in 2017,
McClatchy reported.
After Obama's announcement, Republicans took those breaks off the table because they worried newly legalized aliens would exploit them, according to Politico.
Reid was willing to compromise on the credits to keep the rest of the package alive. In return, he retained an itemized deductible so that Americans in seven states, including his own Nevada, that don't have income tax can write off their sales tax on federal returns.
Democrats also got a mass transit write-off pushed by New York Sen. Chuck Schumer, according to Politico.
The compromises did not sit well with House Democrats, who were not in the loop or with the White House. Obama warned he would veto the plan if it reached his desk without the two tax credits.
The Reid-Camp talks ended due to the Democratic in-fighting, Politico reported.
With the midterm elections over, Obama was moving toward his base and had little interest in compromising. The outcome was also a product of the poor relationship between Reid and Obama, exemplified by the White House banning the leader's chief of staff David Krone, Politico reported.
Many Americans will see their taxes go up unless Congress and the White House can come to terms on extending the expiring tax breaks, McClatchy reported.
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