Plans for Expired Tax Extenders Moves in both Chambers

March 26, 2014

pic-tax-wordWays and Means Committee Chairman Dave Camp (R-Mich.), who up until now has quelled talk about the dozens of expired tax provisions to instead focus on his ambitious tax overhaul plan, is now planning to seek a permanent fix to the extenders that expired in Dec. 2013. He intends to hold hearings and markups going policy by policy to determine which extenders should be made permanent.

Camp has now said that he wants the committee to have a voice on extenders legislation even as he continues to push for a broader overhaul that many see as doomed in Congress this year. Camp raised the possibility that repeatedly extended provisions should be considered a permanent part of the fiscal baseline — as the White House assumed in its fiscal year 2015 budget — for an eventual overhaul.

This House change comes only days after Senate Finance Committee Chairman Ron Wyden (D-Ore.) said that addressing expired tax provisions is his top legislative priority for 2014 and the committee could vote as early as the first week in April on legislation to extend several of these business and individual tax deductions, credits and incentives that expired at the end of 2013.

Included among the 55 tax provisions that expired last year are the research and experimentation credit; the Section 179 expensing limitation; 50-percent bonus depreciation; 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements; the New Markets Tax Credit; and the Work Opportunity Tax Credit. Renewing all of these breaks for one year would cost about $54 billion in total, according to the Congressional Budget Office, with more than $40 billion of the cost due to highly popular expensing provisions for businesses. The cost of a 10-year extension of all the expired provisions, plus those slated to expire in the future, would total more than $930 billion.

It is currently unclear whether the proposal that Wyden plans to bring before the Finance Committee will call for extending all of the expired provisions or will instead allow some provisions to remain lapse. Also unclear is what revenue offsets – if any – Wyden will include in an extenders proposal.

For his part, Finance Committee ranking Republican Orrin Hatch (Utah) has stated repeatedly that he favors taking a selective approach in deciding which expired provisions to renew. Meanwhile, Senate Majority Leader Harry Reid (D-Nev.), introduced a bill (S. 1859) in December giving a clean extension to all the expiring provisions.

In recent years, Congress routinely extended temporary tax breaks either just before they were scheduled to expire at the end of the year or retroactively in January or February. But the politics surrounding a tax overhaul complicated the issue in this Congress, with any move on temporary extenders perceived as a white flag on the broader overhaul effort.

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