The Republican-led House Ways and Means Committee on Tuesday voted to make six expired business tax breaks permanent, including the research and development credit and other incentives for small businesses and multinational companies.
In a written statement following the panel’s meeting, Ways and Means Committee Chairman Dave Camp (R-MI) said by making these six tax breaks permanent, small and large businesses will “have the ability to plan for the future, invest in the economy, hire new workers, and invest in new technologies and products.”
“We need to make the United States a more attractive place to invest and hire,” he added. “These permanent policies are an important first step to achieve that goal and put us on a path toward comprehensive reform that lowers rates and makes the code simpler and fairer.”
The approach Ways and Means took toward the tax breaks is different than the one taken by the Democrat-controlled Senate Finance Committee earlier this month. The Senate panel voted on April 3 to revive about 50 of the 55 tax breaks that expired at the end of 2013 as part of a two-year, $85 million legislative tax “extenders” package.
If approved by Congress, the Senate’s package of tax breaks would be extended through December 31, 2015. That bill contained no offsetting spending cuts or tax increases, according to an article by Richard Rubin of Bloomberg.
The Joint Commission on Taxation estimated that the six permanent tax breaks included in the Ways and Means package will cost about $310 billion over a 10-year period, The Hillreported last weekend.
Representative Sander Levin (D-MI), the ranking Democrat on the Ways and Means Committee, said the Republicans’ approach to extending the tax breaks without any offsets “flies smack in the face of fiscal responsibility.”
“The manner in which Republicans are proceeding – selecting six of the approximately 60 tax provisions that expired last year to make permanent, without any offsets – is both fiscally irresponsible and fundamentally hypocritical. And its implications are deeply troublesome,” Levin said during his opening remarks Tuesday morning.
As Patrick-Temple West noted in his article for Reuters on Tuesday, meaningful tax policy decisions in Congress may not come soon because consideration by the full House and the Senate are still needed and members of both chambers are increasingly preoccupied with getting re-elected in November.
Analysts also do not see quick action on renewing the expired breaks. In a MarketWatcharticle on Tuesday, Henrietta Treyz of Height Analytics LLC said, “Our view remains that the Senate will largely dismiss the House’s approach to the tax extender components if/when the legislation is sent to the upper chamber later this year. We maintain that members are unlikely to agree to a permanent tax extenders ‘fix’ absent comprehensive tax reform, which is not expected to occur this year. As a result, Congress likely will not determine the ultimate fate of the tax extenders package until after the midterm elections. However, we believe that the Senate’s approach – a two-year retroactive extension of the current tax credits – will be enacted into law before year-end.”
Beyond the research credit, the House panel approved a proposal to make permanent the active financing exception, Bloomberg reported. That rule, supported by General Electric Co. and banks such as Citigroup Inc., lets companies defer US taxation on income they earn from finance businesses outside the country.
Other breaks endorsed today include a rule that lets small businesses write off some capital expenses and another that allows multinational companies to move money easily between subsidiaries overseas, according to Bloomberg. Other than the research credit, which passed by a vote of 22 to 12, the other tax breaks were passed on party-line votes.
Camp, who is retiring from Congress at the end of this term, said the committee would consider other expired provisions later this year. He wouldn’t say which ones he supports making permanent; among the largest are bonus depreciation for capital expenses and the ability to deduct state sales taxes, Bloomberg reported.
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.