The top lawmakers on the House Ways and Means Committeedisagreed over whether extending tax breaks for research andinternational finance operations should be offset to prevent theU.S. budget deficit from growing.

Representative Dave Camp, the committee chairman, has suggestedmaking some lapsed tax breaks permanent and letting others expire.Congress has routinely extended many of the breaks without pairingthem with spending cuts or tax increases, he said yesterday.

“If we're going to continue doing that repeatedly,” the MichiganRepublican said at a hearing, “it's worth at least having thisdiscussion.”

More than 50 tax breaks expired Dec. 31, including the researchand development tax credit used by companies such as Intel Corp.and the ability to defer global financing income, which benefitsGeneral Electric Co. and Caterpillar Inc.

As prospects for broader tax-code changes continue to dim, theexpired breaks probably will be the main legislative action on taxpolicy this year.

Camp said today that he would begin advancing legislation topermanently extend some tax breaks.

“As you get to some of the smaller items, we might do them asgroupings, but we're not going to do them all as one fell swoophere,” he told reporters.

The Senate Finance Committee voted April 3 to extend almost allof the breaks through 2015 without covering the cost of more than$85 billion in forgone revenue.

Camp's approach differs from the way he handled the expiredbreaks in the draft revamp of the U.S. tax code he released inFebruary. In that proposal, he started with the assumption that thetax cuts remained expired, which meant that he included enoughrevenue-raising provisions to pay for continuing the breaks.

Camp, who announced last week that he won't seek re-election,also asked for comments on whether that was the right approach.

Representative Sander Levin of Michigan, the top Democrat on theWays and Means panel, said Camp was ignoring some expiredprovisions, such as the New Markets Tax Credit that promotesinvestment in struggling areas.

“Fiscal responsibility cannot simply be a talking point that isset aside when it comes to provide tax incentives for the chosenfew,” Levin said.

Many of the lapsed provisions, particularly the research credit,have bipartisan support. The routine lapses in that break andothers are inefficient, said James Redpath, a Minnesota accountanttestifying at today's hearing.

“It makes businesses do things they otherwise wouldn't do,” hesaid.

The breaks for U.S.-based multinationals' foreign operations aremore controversial. Texas Democrat Lloyd Doggett said they haveallowed companies such as GE to reduce their tax rates and removesome income from taxation by any country.

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