(Bloomberg) The House of Representatives has voted to revive dozens of lapsed U.S. tax breaks only for 2014 and the Senate now looks likely to follow suit within days.
The plan achieves what lawmakers called the bare minimum package needed to avoid delaying tax refunds and unfairly punishing taxpayers. Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, told reporters today that the U.S. Senate wouldn’t amend the bill, setting the stage for an up-or-down vote, probably within a week.
The House’s 378-46 vote late yesterday would provide $42 billion in temporary relief to taxpayers, including companies that rely on the research tax credit and the production tax credit for wind energy.
It provides no certainty for the tax breaks in 2015, though lawmakers said the one-year extension was the best available option after a broader deal collapsed.
“The public deserves better than the equivalent of looking at a Magic 8-ball,” Wyden said today.
Senate leaders haven’t said when they will consider the measure. The bipartisan House vote, tacit support from the White House and lack of time left before Congress adjourns before the end of the year signal that the Senate will probably pass the bill and examine the tax breaks again in 2015.
“This legislation is no solution to the challenges we face in America’s tax system,” said Representative Tom Price, a Georgia Republican. “It simply buys more time for Congress to forge a long-term agreement on these specific items—some of which should not be extended in the future—and, more importantly, on fundamental tax reform.”
In the Senate, Wyden has complained that the measure excludes tax breaks for the health care of laid-off workers and the purchase of plug-in electric motorcycles. Wyden also would prefer a bill that continues the breaks through 2015.
President Barack Obama said the administration is open to a short-term extension. He hasn’t said whether he would sign the House bill.
The tax breaks, which lapsed Dec. 31, 2013, aid businesses and individuals. Corporations including Citigroup Inc. and General Electric Co. would benefit from the ability to defer U.S. taxes on overseas financing income. Companies making capital purchases would have faster write-offs.
Individuals who sold their homes for less than what they owed would be able to exclude the forgiven debt from income.
House lawmakers who spoke during yesterday’s debate said the practice of providing retroactive, short-term tax incentives was terrible policy and little substitute for a tax-code revamp they haven’t been able to accomplish.
“This is a lousy way to run a tax code; it’s a lousy way to run a government,” said Representative Ron Kind, a Wisconsin Democrat. “I reluctantly support it.”
The House vote came about a week after lawmakers abandoned efforts to reach a broader deal on reviving tax breaks that would have exceeded $400 billion over a decade.
The bipartisan plan, which was being negotiated by Senate Majority Leader Harry Reid, a Nevada Democrat, and House Ways and Means Chairman Dave Camp, a Michigan Republican, would have locked in some benefits including the research tax credit by removing their expiration dates.
Most of the other breaks would have been extended through 2015.
The talks fell apart when Democrats, including Obama and Treasury Secretary Jacob J. Lew, objected to the lawmakers’ plan not to extend tax credits for low-income and middle-income families that are scheduled to expire at the end of 2017. Obama threatened to veto the emerging proposal.
The tax-break bill, H.R. 5771, will be combined with a separate bill, H.R. 647, to create tax-advantaged accounts for disabled people.
Such accounts “will give those individuals a chance to realize their hopes and their dreams, to be able to be part of the American dream,” said Representative Ander Crenshaw, a Florida Republican, during floor debate.
That measure passed the House yesterday on a 404-17 vote.
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