(Bloomberg) House Republicans are moving toward a vote this week on legislation to revive dozens of lapsed U.S. tax breaks and extend them only through the end of this year.
The decision reflects Republicans’ calculation that a $400 billion-plus bipartisan proposal that collapsed last week probably can’t be resurrected and would face an uncertain fate in the House even if it could.
That tentative agreement would have made permanent some significant business tax breaks, including the research-and- development tax credit and expanded capital write-offs for small businesses.
The House’s move toward a temporary patch that would expire Dec. 31 shows lawmakers’ desire to wrap up the congressional session as soon as possible and minimize disruption to the start of the tax-filing season in January.
“It’s either this or nothing,” said Republican Representative Pat Tiberi of Ohio, a senior member of the House Ways and Means Committee.
The measure, H.R. 5771, is expected to reach the House floor Wednesday. It would cost the government $44.7 billion in forgone revenue over a decade, according to the Joint Committee on Taxation.
Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, backed the package Monday night, signaling that the bill may have a broad bipartisan vote in the House. Top Senate Democrats haven’t taken a position.
The Club for Growth, a small-government group, said it opposed the bill, calling it a “hodge-podge of special interest earmarks in the federal tax code” and said Congress should do nothing with the breaks.
The bill introduced Monday by House Ways and Means Chairman Dave Camp, a Michigan Republican, makes almost no policy changes to the breaks and extends almost all of those that lapsed at the end of 2013.
One exception is a tax credit that pays for health care of laid-off workers.
Another break that wouldn’t be revived in the House bill is a tax credit for two-wheeled and three-wheeled plug-in vehicles that is backed by Senate Finance Chairman Ron Wyden, an Oregon Democrat. Brammo Inc., a maker of electric motorcycles, is based in Wyden’s home state.
Energy and Transportation
Wyden said Monday night that he would advocate for health care for workers and mentioned renewable energy and transportation as issues in question.
“The balance is really the key” to getting bipartisan support for a plan, he told reporters after a meeting of Finance Committee Democrats. “Certainty, predictability and balance.”
Wyden, who advocates a two-year extension of most lapsed breaks, wouldn’t say whether he would support a one-year bill. He said taking a position was akin to negotiating in public.
The House bill would mean the revived tax breaks would become law less than a month before they expire, sapping much of their value as incentives.
Senator Orrin Hatch, a Utah Republican poised to become chairman of the Finance Committee in January, told reporters Monday that he preferred a two-year bill though he didn’t rule out supporting a one-year measure.
In a speech Tuesday, he said Senate Democrats had a choice to make.
“Can they come to the table with an offer that is designed to reach agreement with the House?” he said, according to prepared remarks. “Or, will they force us into defaulting to a one-year retroactive bill? The choice is theirs and the clock is ticking.”
The Senate Finance panel 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, said a Republican aide who sought anonymity to discuss the plan. 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.
The tax breaks 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 broader 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 of Nevada, were able to secure some of their priorities in that tentative deal. That included 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, including Treasury Secretary Jacob J. Lew, contended that the package was tilted too heavily toward corporations and not low-income families.
“The president blew it up, so we’re just going to do a clean one-year deal,” Representative Paul Ryan, the next chairman of Ways and Means, said Tuesday at the Wall Street Journal’s CEO Council in Washington.
Tiberi told reporters that it was “disappointing” that the talks between Camp and Reid didn’t yield a bill.
“Rather than provide leadership, the president continues to do the opposite,” Tiberi said.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access