Sen. Charles Grassley, R-Iowa, the former chairman of the Senate Finance Committee, is warning that tax season could be delayed next year if approval of tax extenders legislation is put off until after the mid-term elections in November.
Grassley pointed out in a speech on the Senate floor Thursday that Senate Majority Leader Harry Reid, D-Nev., expressed the view last week that legislation for extending dozens of expired tax breaks is unlikely to be passed until a lame-duck session following the election. “The majority leader blames this on the minority, but it is the majority leader that is uniquely situated under Senate rules to determine what legislation will be considered on the Senate floor,” said Grassley.
“The majority leader’s excuse for not proceeding to extenders before the lame duck is that Republicans are seeking to offer amendments unrelated to tax extenders. This excuse simply does not fly.”
Senate Minority Leader Mitch McConnell, R-Ky., has also voiced skepticism about a tax extenders bill passing this year before the election, given the basic disagreement between both parties over tax reform priorities. Leaders of the Senate Finance Committee have announced a series of hearings over the summer to move ahead on tax reform (see Senate Leaders Plot Path for Tax Reform).
Grassley noted, however, that consideration of tax extenders legislation can’t wait until the end of the year without disrupting tax season. When tax provisions have expired in previous years, as when the Bush tax cuts expired at the end of 2012 and Congress and the Obama administration made a last-minute deal, passing legislation on New Year’s Eve 2013 to avert the so-called “fiscal cliff,” the delay also postponed the start of tax season. The Internal Revenue Service was forced to produce new tax forms and change its tax tables and systems much later than usual.
“Delaying tax extenders legislation to the lame duck has real consequences for our constituents,” said Grassley. “We know from previous years, late action on tax extenders poses significant tax administration burdens that cause headaches and hardships for millions of taxpayers. When we fail to act in a timely fashion, tax forms are not ready and refunds are delayed. We owe it to our constituents to see to it that these added complications are not a factor this year. Tax season is unpleasant enough without us adding to it by failing to do our job in a timely fashion.”
Grassley pointed out that some of the most popular tax deductions are among the many that have expired and not yet been renewed.
“While many view tax extenders as benefitting businesses, the truth is the delay of widely used individual tax provisions will impact millions of taxpayers,” Grassley observed. “Three of the most widely used tax provisions are the state and local sales tax deduction, claimed on over 11 million returns in 2011, the above-the-line deduction for teacher expenses, claimed on over 3.8 million tax returns in 2011, and the college tuition deduction, which was claimed on about 2 million tax returns. These three provisions alone give us over 16 million reasons to act now to ensure we don’t subject these taxpayers to needless delays and complications this filing season.”
Some expired business tax provisions have been voted on in the House, such as the research and development tax credit in a vote last month. The House also voted Thursday to extend the Section 179 expensing limit of up to $500,000, but the Senate has not yet acted on that and other business tax extender items (see House Passes Pair of Business Tax Break Bills).
“These 16 million tax filers should provide more than enough reason for not putting off tax extenders legislation until the lame duck,” said Grassley. “But, if you need another reason, think of the small businesses that are anxiously looking on wondering what we are going to do about the expiration of the enhanced expensing rules under Section 179. I’m sure I’m not the only one hearing from small business owners and farmers who are putting off purchasing that new truck or tractor all because they do not know the fate of this provision. This is bad for economic growth and bad for jobs.”
Grassley also pointed to expired tax breaks for renewable energy sources, such as wind energy, an important industry in his home state of Iowa.
“Then there is the lapse of the renewable energy incentives that support millions of jobs, not only in Iowa but in states across the country,” he said. “The expiration of these provisions has already hampered the strides made toward a viable self-sustainable renewable energy and fuel sector. Delaying extension of these important provisions is hurting the economy and costing jobs. A biofuels organization found that nearly 80 percent of U.S. biodiesel producers have scaled back production this year. Sixty-six percent of biodiesel producers have reduced their workforce or anticipate cutting jobs. This is a direct result of policy uncertainties in Washington, including the expiration of the biodiesel tax incentive.”
Grassley blamed Reid for standing in the way of tax extenders legislation by blocking other senators from introducing further amendments, using a Senate tactic known as “filling the tree.”
“The only thing standing in the way of passing the extenders package here in the Senate is Majority Leader Reid and a handful of reasonable amendments,” said Grassley.
Last month, Senate Republicans blocked a package of tax extenders legislation that would renew more than 50 of the expired tax breaks from advancing after it was introduced by the current Senate Finance Committee chairman, Ron Wyden, D-Ore. (see Tax Cuts in Limbo as Senate Republicans Block Extenders Bill). The legislation had needed 60 votes to advance in the Senate, but received a vote of only 53 to 40. Republican lawmakers objected to their inability to offer amendments. Wyden’s Republican counterpart on the committee, ranking member Orrin Hatch, R-Utah, said he would work with Wyden on resolving the impasse.
“Mr. President, we were all sent here by our constituents to represent them in the legislative process,” said Grassley. “So, let’s legislate. A bipartisan bill such as tax extenders would be a perfect opportunity to show our constituents our ability to work together and get things done. I call on the majority leader to bring the tax extenders bill back to the floor. Allow for a reasonable amendment process that permits individual senators of both parties to have a say in crafting this legislation.”