(Bloomberg) The U.S. House of Representatives will probably vote this week to revive dozens of lapsed tax breaks and extend them only through the end of this year, said a Republican member of the Ways and Means Committee.
“It’s either this or nothing,” said Republican Representative Pat Tiberi of Ohio, a senior member of the tax-writing panel.
The move reflects Republicans’ calculation that a $400 billion-plus bipartisan proposal that collapsed last week probably can’t be resurrected and would face an uncertain future in the House even if it could. That tentative agreement would have made permanent some major business tax breaks, including the research-and-development tax credit and expanded capital write-offs for small businesses.
Instead, the House move toward a temporary patch that would expire Dec. 31 shows lawmakers’ desire to wrap up the congressional session as quickly as possible and minimize disruption to the beginning of the tax-filing season in January. All or almost all the breaks would be extended, said two Republican aides, who spoke on condition of anonymity to describe the plans.
The result would be a set of tax breaks that would become law less than a month before they expire, sapping much of their value as incentives.
The House isn’t scheduled to hold votes on Dec. 5, and lawmakers plan to adjourn for the year by Dec. 11.
The Senate Finance Committee approved a bill earlier this year that would extend the lapsed tax breaks through 2015. A two-year bill lacked enough support from House Republicans, one of the aides said. That’s because many would accept some provisions only to prevent filing season delays and were unwilling to extend them into 2015, the aide said.
Most of the breaks in the package expired on Dec. 31, 2013. They include the ability for multinational corporations such as Citigroup Inc. to defer U.S. taxes on certain overseas financing income. Other lapsed breaks include the production tax credit for wind energy and a provision that lets individuals exclude forgiven debt from income on short sales of houses.
As many as one in six taxpayers could be affected if the breaks aren’t extended, according to H&R Block Inc., the largest U.S. tax-preparation company.
The larger plan that collapsed last week would have extended most of the lapsed breaks through 2015 and locked in others permanently.
Senate Democratic leaders, including Majority Leader Harry Reid, were able to secure some of their priorities, including a permanent deduction for state sales taxes and extension of a tuition tax credit that expires at the end of 2017.
President Barack Obama threatened to veto the emerging deal because it didn’t extend expansions of the child tax credit and earned income tax credit that lapse at the end of 2017. Administration officials such as Treasury Secretary Jacob J. Lew contended that the package was tilted too heavily toward corporations and not low-income families.
Tiberi told reporters that it was “disappointing” that the talks between Ways and Means Chairman Dave Camp, a Michigan Republican, and Reid didn’t yield a bill.
“Rather than provide leadership, the president continues to do the opposite,” Tiberi said.
The credits Obama wanted to extend have high error and fraud rates, said one of the Republican aides. Obama’s immigration policy change made the issue even more complicated, the aide said.
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