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Tax break extensions lose momentum before election

By Patrick Temple-West

WASHINGTON (Reuters) - The Congress is unlikely to renew before November elections 67 temporary tax measures that expired at the end of 2011, Senator Orrin Hatch, the top Republican on the Senate Finance Committee, told Reuters on Tuesday.

"I doubt it," he said of the possibility of restoring the breaks - known as tax extenders - as part of an expected renewal of payroll tax cuts before those cuts expire at the end of February.

Groups interested in extending the tax breaks, ranging from blue-chip companies to small businesses in poor communities, hope to revive the 67 tax breaks that expired at the end of 2011, according to the Joint Committee on Taxation in Congress.

The interest groups are pushing to get the costly tax provisions attached to the payroll tax extension for the rest of 2012. That bill is currently in a conference committee between the Republican-led House and the Democratic-led Senate.

Some lawmakers are worried that knitting tax extenders into the payroll tax cut bill is politically risky and are wary of doing anything that might hurt them and their parties in the run-up to the November elections.

A Senate staff source said House Speaker John Boehner, a Republican, was unlikely to attach the tax extenders to the payroll tax extension. A spokesperson for Boehner did not immediately respond to requests for comment on Tuesday.

Democrats, including Senate Majority Leader Harry Reid and Senate Finance Committee Chairman Max Baucus, are pushing for the tax breaks to be part of the payroll tax bill. Republicans, including House Ways and Means chairman Dave Camp, are leery of that approach.

Baucus and Camp are both payroll tax conference members.

Many of the tax extenders can be revived retroactively. But some, such as a tax exclusion for mass transit and a work opportunity tax credit, are more difficult to renew retroactively.

No estimate for their collective value was immediately available.

The last two tax extender bills were passed almost a year after the tax breaks expired.

Lobbyists said they saw the payroll tax cut bill as the only tax bill with a chance of passage before the general election on November 6. A new Congress will take office in January 2013.

BUDGET CONCERNS

Lobbyists vying for a quick extension are trying to work together to get the tax extenders passed en masse.

"We are all trying to pull with the same oar at this point," said Bob Rapoza, who is leading a coalition that supports a new markets tax credit designed to promote investment in low-income communities.

Without a clear way to pay for the tax breaks, coalitions may splinter, leaving some tax breaks behind.

"This time around, some Republicans may say, 'I'd like to see some spending cuts,'" said Ken Kies, a tax lobbyist and managing director of the Federal Policy Group. "That could make this more complicated," he said.

A full year extension of the payroll tax cut alone is estimated to add $99.5 billion to the budget deficit, according to the Congressional Research Service.

(Reporting By Patrick Temple-West; Editing by Eric Walsh)

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