Senate Finance Committee sets up task forces to deal with tax extenders
The Republican and Democratic leaders of the Senate Finance Committee formed a half dozen task forces Thursday to deal with the perennial problem of tax extenders, the temporary tax breaks that need to be renewed every few years.
Even though the PATH Act of 2015 and the Tax Cuts and Jobs Act of 2017 made many of the tax breaks into more permanent parts of the tax code, Congress still needs to deal with dozens of tax breaks that expired in 2017 or 2018 or are set to expire at the end of this year. In February, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and the ranking Democrat on the committee, Ron Wyden, D-Ore., introduced legislation to retroactively extend 26 tax breaks that expired in 2017 and three more that expired in 2018 (see Senators introduce retroactive tax extenders and disaster relief bill). The new task forces are going to examine a total of 42 tax breaks that either expired or are going to expire by the end of the year.
The taskforces will look at tax policies within the areas of workforce and community development, health, energy, business cost recovery, and a combined group consisting of individual, excise and other temporary policies. The goal is to find potential solutions that would provide more long-term certainty in these areas. A separate task force will discuss whether a core package of tax relief provisions should be available when natural disasters strike.
“It’s past time for Congress to end its bad habit of waiting until the last minute to extend temporary tax policy,” Grassley said in a statement. “This type of tax policy is meant to encourage long-term growth and investment. By definition, that must be done deliberately and ahead of time to be successful. I encourage stakeholders to view this as an opportunity to come to the table and work with us to find long-term solutions. The alternative is continued uncertainty or an even worse outcome.”
He is calling on lawmakers in the House to send the Senate a bill that addresses the provisions that expired for 2018. The House is required under the Constitution to initiate all tax legislation.
“Extending tax incentives for a year or two at a time is no way to craft public policy. The Finance Committee’s task forces are working to develop permanent solutions to these vexing tax issues,” Wyden said in a statement.
Grassley said in a speech Thursday on the Senate floor that they would ask the task forces to work with stakeholders, other Senate offices, and interested parties to consider the original purpose of the policy and whether the need for the provision continues today.
“If so, we’ll ask the task force to identify possible solutions that would provide long-term certainty in these areas,” he added. “That may mean that the credit or deduction phases out over a period of years to provide an affected industry a glide path to self-sufficiency. In other cases, it may mean that the provision could be scaled back, while still providing a sufficient benefit for the affected industry or taxpayers, in exchange for long-term certainty. If there’s little or no case for continuing the temporary policy, the task force should consider whether the provision should be eliminated.”
He acknowledged there may be provisions identified by a task force that should be extended without reform. “For these provisions, the task force will have to consider whether a continued short-term extension is sufficient to achieve the policy goals, whether a longer-term extension is desirable to force a future Congress to reevaluate the provision down the road, or if permanency is warranted,” he added. “This is particularly relevant for the temporary tax policies relating to health care. For these, we’ll ask the task force to focus on whether the tax policy should be extended and for what duration. We’ll leave the evaluation of the underlying health care policy to the health experts.”
The task forces will work to identify reform proposals, such as those identified for the short-line and biodiesel credits last year, so they can avoid kicking the can down the road, Grassley noted. “If Congress is going to use temporary tax policy, taxpayers should be able to count on it for the intended period,” he said. “Moreover, the intended policy should be clear so taxpayers do not fall into the trap of relying on a provision simply because Congress has created the expectation that the provisions will be consistently extended, even well after the fact. Taxpayers relying on these provisions have been doing what Congress wanted them to do — investing in certain types of property, hiring new employees or taking other types of actions. We shouldn’t punish them now for doing so.”
Further information about the tax extenders can be found here.