The Senate Finance Committee approved legislation Thursday extending dozens of tax cuts known as tax extenders, including the alternative minimum tax patch, which have either expired or are scheduled to expire at the end of the year, while paring back approximately 25 percent of the traditional tax breaks in the name of tax reform.
The legislation, known as the Family and Business Tax Cut Certainty Act of 2012, promises to provide more certainty to tax professionals and critical support for working families and businesses across the country and prevents middle-class families from being hit by the alternative minimum tax for two years. The committee approved the bipartisan bill by a vote of 19 to 5.
“People need certainty to plan their finances, and businesses need certainty to hire, invest and grow,” said Senate Finance Committee chairman Max Baucus, D-Mont., in a statement. “These tax cuts will reassure families, help spur job growth and boost the economy. No bill is perfect, but what’s important is this shows the American people that Congress can work together to get things done. This bipartisan work is just what all members of Congress will need to do with the fiscal cliff looming and tax reform on the horizon.”
The legislation includes tax cuts for small businesses, working families, research and development, renewable energy and mass transit. The proposal also includes a key provision to patch the AMT. The two-year patch will prevent the AMT from hitting 27 million middle-class taxpayers in the 2012 tax year alone. Other provisions would extend the ability for school teachers to deduct expenses for school supplies, and the election to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction permitted for state and local income taxes, along with the above-the-line deduction for qualified tuition-related expenses. Energy-related provisions include an extension of the wind energy production tax credit for one year, through Dec. 31, 2013, while changing the "placed in service" date for the wind energy facility to when construction begins.
One of the tax breaks that have been removed in the so-called Chairman's Mark was a provision regarding the expensing of "brownfields" environmental remediation costs.
Sen. Orrin Hatch, R-Utah, the ranking Republican member of the committee, was pleased that the bill had pared back approximately 21 of the usual tax extenders. “The explosion of temporary tax provisions in recent years has been a very notable and problematic trend,” he said. “The number of temporary tax provisions has grown from 42 in 1998 to 154 in 2011. If you average that number out, you will find that, over that 13 year period, Congress was adding almost 9 extenders per year. To those of us who have been members of this committee for a while, that number may seem low. The reason it may seem low is that we re-visit these same issues year-after-year. We need to break out of that rut. My friend the Chairman has often said we need to get away from being an extenders Congress or a maintenance Congress. And I agree. We should not continue extending provisions in a stop-and-go fashion.”