The House Ways and Means Committee is holding a hearing Tuesday to consider whether to permanently extend the business tax breaks that expired at the end of 2013. In particular, the hearing will focus on the provisions extended by Camp's Tax Reform Act of 2014; the two largest of which are the research and experimentation (R&E) tax credit and Section 179 expensing.
The Senate Finance Committee met yesterday to consider the fate of the 50-plus tax breaks that expired last year known as "tax extenders." Unfortunately, they chose to extend almost all of them for two years by adding the costs of the tax cuts to the national debt.
One of the recurring themes of recent budget debates has been partisan differences over the appropriate level of revenues, with Republicans rejecting any increased revenue proposed by Democrats in budget negotiations. But in separate releases yesterday, Senate Democrats proposed reducing revenues below the levels proposed by House Republicans. While this may seem like an April Fool’s joke, the numbers don’t lie.
Update: Two days later, the Senate Finance Committee amended the legislation to extend nearly all of the provisions that had been allowed to expire. See our blog post for analysis of the final package.
In a letter to the Ways & Means Committee, CRFB President Maya MacGuineas states that Chairman Dave Camp's tax reform draft made the right choices in choosing how to deal with the tax extenders and potential revenue from economic growth. The full letter can be seen here.
Last week, we made the case that an expired provision known as bonus depreciation be treated separately from the other tax extenders, both because it was intended as temporary stimulus and because the small cost of a one-year extension masks the huge cost of making it permanent. Specifically, extending bonus depreciation for one year would cost about $5 billion (before interest) while extending it year after year would cost $300 billion.
Senate Budget Committee Chair Patty Murray (D-WA) introduced legislation yesterday to cut taxes for low- and middle-income workers in a few different ways. The legislation is intended to be fully paid for, and although there is no official CBO or JCT score, it appears to accomplish that goal.
This is the sixteenth post in our blog series, The Tax Break-Down, which analyzes and review tax breaks under discussion as part of tax reform. Previously, we wrote about the Charitable Deduction, which lets itemizers deduct the amount they donate to charity. Read more posts in the Tax Break-Down here. This blog examines the provisions that expired at the end of 2013.
In the coming weeks, both the House and Senate are expected to begin discussing what to do with a number of expired tax provisions known as the "tax extenders." Most of these provisions are extended year after year and have become, in many ways, a fixture of the tax code. Bonus depreciation does not fall into this category.