Finance Committee OKs Extending Most Expired Tax Breaks
A majority of the 55 tax breaks that died on December 31, 2013, may have received new life.
The Senate Finance Committee on Thursday voted to revive about 50 of the tax breaks, which would provide benefits for auto-racing tracks, wind energy, multinational corporations, Hollywood, schoolteachers, Puerto Rican rum producers, college tuition, and more, Reuters and Bloomberg Businessweek reported.
The tax breaks were included in a two-year, $85 million legislative package known as the “extenders,” so named because they need to be renewed regularly. They will next go to the full Senate for consideration. The House Ways and Means Committee is expected to vote on its own extenders package next week, according to Reuters.
On April 1, new Senate Finance Committee Chairman Ron Wyden (D-OR) unveiled a marked-up bill – the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 – that would revise most of the provisions currently in limbo. As Ken Berry noted in his article for AccountingWEB earlier today, tax breaks are typically extended closer to the beginning of the new year, but retroactive extensions have been approved in the past.
If approved by Congress, the tax breaks would be extended through December 31, 2015, Bloomberg reported.
“Many of these extenders are well-intentioned and ought to be permanent. Their stop-and-go nature obviously contributes to the lack of certainty and predictability America needs to create more family wage jobs. It doesn’t have to be this way,” Wyden said during his opening remarks this morning.
He also reiterated comments he made earlier this week that this will be the last tax extenders bill the finance panel takes up as long as he is chairman.
“That’s why the bill is called the EXPIRE Act. It is meant to expire,” he added.
The chairman wants to end the extenders process as part of a broad overhaul of the tax code, but he noted this morning, “[W]e need to balance short-term needs with long-term goals, and the bill before us today does that.”
“After President Reagan signed the 1986 tax reform act into law, there were only 14 provisions that carried expiration dates, and we’ve got a lot of work to do to fix the tax code,” Wyden said. “So when the committee put this package together, we said no to some things and reformed others. I hope we can all get on the same page today and be sparing with amendments.”
According to Reuters, the approved package includes a tax break used by big companies to avoid corporate income tax on capital transfers between offshore units, known as the “look-through rule.” Wyden had excluded this in his original bill, but it was put back.
Tax breaks for wind-energy production and auto-racing tracks were also added back to Wyden's legislation. Other tax breaks that were renewed included ones for teacher supply costs, mortgage insurance costs, railroad track maintenance, bonus depreciation for businesses, and business research and development.
The committee also approved two amendments to help small businesses. Senators voted to allow small businesses to get the research and development tax credit when they are incurring losses. Additionally, the committee approved inflation protection for certain small business tax breaks, Reuters reported.
In a statement following the committee’s vote, Randall Stephenson, chairman and CEO of AT&T, said the bill’s two-year commitment to the tax extenders is “a bridge to meaningful comprehensive tax reform that provides the certainty needed to drive investment and job creation in the United States.”
“The successful markup of this bipartisan bill, which, importantly, includes the extension of accelerated bonus depreciation, gives us the confidence to begin moving forward with the deployment of fiber to additional US cities,” he added. “Obviously, our investment in major fiber deployments to additional US cities will create jobs and provide a significant boost to local economies. We expect the bill will spur similar investment decisions by other US companies.”
According to Bloomberg, one item that wasn’t included in the package is a tax credit for making energy-efficient appliances, a break that benefits General Electric Co. and Whirlpool Corp.
Democrats also voted to prevent Republicans from considering an amendment to delay the excise tax on medical devices for two years. Wyden, who said he shares Republicans’ concerns about the tax, said it was outside the scope of the measure, Bloomberg reported.