The Senate Finance Committee on Tuesday approved a bill to renew for another two years the package of so-called tax extenders, a collection of more than 50 targeted tax benefits for businesses and individuals.
The committee voted 23-3 in favor of the legislation, which now moves to the Senate floor. Committee Chairman Orrin G. Hatch, R-Utah, said renewing the package, which expired at the end of last year, would give taxpayers more certainty and give lawmakers time to figure out how to extend some of the provisions permanently.
The tax extenders are typically renewed by Congress every one to two years. Lawmakers last renewed the extenders in December, but they expired mere days later. Congress has gotten into the habit of allowing the provisions to expire and then renewing them retroactively at the end of the year so taxpayers can take advantage of them when they file their tax returns the following year.
To avoid endlessly repeating the cycle, some have tried to enact permanent policy for some of the most popular extenders, such as the tax credit for research and development, but they have so far been unsuccessful. Last year, former House Ways and Means Chairman Dave Camp, R-Mich., put together a deal with former Senate Majority Leader Harry Reid, D-Nev., that would have permanently extended several of the provisions, but that deal was scuttled by a veto threat from President Barack Obama, who said the deal would not have done enough for the middle class.
In February, the House approved a number of bills permanently renewing provisions such as the research credit and the deduction for state and local sales taxes. The changes are pending in the Senate.
One of the provisions expected to come at the highest cost is an extension of the renewable production tax credit, under which taxpayers can claim a 2.3 cent per kilowatt-hour tax credit for wind and other renewable electricity. That is expected to cost nearly $10.5 billion over 10 years, according to the Joint Committee on Taxation. At the markup on Tuesday, many Republicans on the committee advocated for phasing out the tax credit, while some Democrats defended it or suggested that incentives for oil and gas production be phased out as well.
The version of the bill passed by the committee contained some small changes introduced by Hatch, including one revenue raiser that would requiring mortgage lenders to provide more information to the Internal Revenue Service to improve compliance. That measure was also included in a bill to pay for an extension of the Highway Trust Fund passed by the House last week.
—By Martin J. Milita, Jr., Esq. Senior Director
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