Congress made some moves this week in working on tax extenders, even though it is not expected to pass any legislation until after the midterm elections.
House Ways and Means Committee chairman Dave Camp, R-Mich., on Monday introduced the Jobs for America Act, which includes provisions for making the research and development tax credit permanent, and making permanent the bonus depreciation and Section 179 expensing at higher levels. The bill would also repeal the medical device tax in the Affordable Care Act and change the “30-hour rule” in the Affordable Care Act’s employer mandate for defining full-time work, increasing it to 40 hours.
“These are only a few among a long list of policies that will ultimately get Americans back to work and increase their quality of living,” Camp said Thursday. “With better jobs, higher take home pay and a stronger economy, we can offer a brighter future for our youth and ease the everyday burdens felt by individuals nationwide. It’s time to create an America that works.”
The American Institiute of CPAs sent a letter to Camp and other leaders of Congress's main tax committees on Monday urging them to address the tax extenders legislation (see AICPA Prods Congress to Pass Tax Extenders).
Camp and the ranking Democratic member on the committee, Rep. Sander Levin, D-Mich., also introduced on Thursday the Tax Technical Corrections Act of 2014 to make technical corrections to U.S. tax laws. They said the legislation responds to various inquiries from the public and government enforcement agencies with respect to the application of tax laws, and clarifies congressional intent of those laws. The Senate Finance Committee approved similar legislation earlier this year.
“This bill provides important technical corrections to various tax provisions to address ambiguities that only make the tax code more confusing and complex,” said Camp. “This tax technical corrections bill will help provide clarity both to taxpayers and to those administering the tax law, while Congress continues to work to ease the burden our broken tax code has on hardworking Americans and businesses small and large.”
“These commonsense corrections to the tax code will make it easier for American taxpayers to comply with our federal tax law,” said Levin. “I thank the Joint Committee on Taxation for working with us to get these important corrections done.”
On the other side of the Capitol, the Senate Finance Committee held a hearing Wednesday to discuss the various energy tax extender provisions.
Committee chairman Ron Wyden, D-Ore., stressed the need for tax reform that creates a level playing-field for the clean energy sector to thrive.
“In order to lead the global energy transformation, the United States should strive for energy exceptionalism that addresses the challenges of the 21st century and no longer slows down energy innovators,” Wyden said. “It’s time to end the crazy quilt of more than 40 energy tax incentives with a modern, technology-neutral approach. Pursuing predictable, level playing-field tax policies could clear the way for America’s clean energy sector to thrive at home and outmatch global competitors.”
Wyden said the Tax Code needs to be updated to take the costs and benefits of energy sources into account. He said America’s energy policy must reflect factors such as energy efficiency, affordability, pollution and sustainability. He also called for an end to stop-and-go treatment of certain energy tax incentives that cause uncertainty and hurt investment for clean energy producers. Wyden noted that such short-term extensions put renewables at a disadvantage compared to traditional energy sources that have tax benefits permanently baked into law.
On Thursday, Congress passed a short-term extension of the Internet Tax Freedom Act as part of a continuing resolution. The bill continues a ban on taxes on Internet access service. Congress remains at odds, however, on tying the legislation to the Marketplace Fairness Act, which would govern sales taxes for online purchases.
“Thousands of small businesses across the country are breathing a sigh of relief that the Internet Tax Freedom Act is poised to be extended as part of the spending resolution that passed the Senate today,” Wyden said in a statement Thursday. “But when the Congress returns, I fully expect another misguided attempt to tie this essential legislation to an unrelated and harmful proposal that would turn small businesses into tax collectors for hundreds of different jurisdictions across the country. Over the next six weeks, I hope that the proponents of the Marketplace Fairness Act will face the facts and admit that they can’t achieve their goal by holding the Internet economy hostage, so they’ll have to go about it any other way than tying it to ITFA. There is absolutely no way to reconcile the current MFA and ITFA—and it will stay that way after this short-term extension. Anyone who votes for passing MFA alongside ITFA is voting to repeal the Internet Tax Freedom Act.”
In a speech Thursday at the American Enterprise Institute, House Speaker John Boehner, R-Ohio, also called for reforming the Tax Code, among one of five priorities for “resetting America’s economic foundation.”
“You’ve heard a lot lately about corporate inversions,” he said. “Well, inversions are really just visible symptoms of a much deeper problem: our tax code is terrible. No one understands it, certainly not the IRS. People pay an accountant hundreds of dollars in the hopes of paying less to the feds. They have to, because over the years thousands of changes have been made to the tax code, largely for the benefit of the well-connected, who happily take their share while the middle class remains overtaxed. So all this talk about inversions is just making the problem smaller. It’s fussing over a divot when the road is loaded with potholes. Let’s fix the whole Tax Code. Make it pro-growth and pro-family. Bring down the rates for every American, clear out all the loopholes, allow people to do their taxes on two—yes, two—sheets of paper. (See, I can already feel the blood pressure in the room dropping.) We do this, we get rid of one of the biggest reasons jobs go overseas, and make it easier for families to do everything from build a house to save for college.”
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