Daily Journal masthead

Businesses big and small could keep expired tax breaks under bill passed by Senate panel

bug
Share/Save/Bookmark

WASHINGTON — Businesses big and small would get to keep claiming dozens of tax breaks that expired at the start of the year under a bill that overwhelmingly passed the Senate Finance Committee Tuesday.

Struggling homeowners and people who live in states without a state income tax would get to keep their tax breaks, too.

The bill would extend more than 50 tax credits, exemptions and deductions through 2016, beyond the upcoming presidential election. It would add $95 billion to the budget deficit over the next decade, according to the nonpartisan Joint Committee on Taxation, which provides official estimates for Congress.

"While some tend to write off tax extenders as special-interest giveaways, in terms of dollars, the bulk of the extenders in this package go toward very popular, widely applicable provisions," said Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee.

The committee passed the bill by a vote of 23 to 3. It now goes to the full Senate.

Among the biggest breaks for businesses are a tax credit for research and development; an exemption that allows financial companies such as banks and investment firms to shield foreign profits from being taxed by the U.S.; and several provisions that allow businesses to write off capital investments more quickly.

There is also a generous tax credit for using wind farms and other renewable energy sources to produce electricity.

More narrow provisions include tax breaks for filmmakers, theatrical productions, racehorse owners and NASCAR track owners. There are also provisions to help rum producers in Puerto Rico and the Virgin Islands.

The biggest tax break for individuals allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns. Another protects struggling homeowners who get their mortgages reduced from paying income taxes on the amount of debt that was forgiven.

Other provisions benefit commuters who use public transportation and teachers who spend their own money on classroom supplies.

"With the understanding that our long-term goal is a tax code overhaul that works for all Americans, Congress needs to get these provisions back in place," said Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee.

Congress routinely lets the tax breaks expire, only to retroactively renew them for a year or two.

Last year, the tax breaks expired in January, and Congress didn't renew them until December. Lawmakers, however, only extended them for a few more weeks, through the end of 2015.

The Senate bill would restore a tax credit for buying electric motorcycles. The $4 million provision, which expired at the end of 2014, was left out of last year's bill by former Rep. Dave Camp, R-Mich., who used to chair the House Ways and Means Committee.

The credit is championed by Wyden because it helps Oregon-based Brammo, a maker of electric motorcycles. House Republicans blamed Wyden for helping to derail negotiations last year that would have made some of the tax breaks permanent.

Business groups have complained for years that the patchwork of temporary tax breaks makes it difficult for them to plan. The breaks were designed to provide incentives for businesses to invest and grow, yet those incentives are diminished when companies don't know whether the tax breaks will be renewed from year to year.

The House has voted to make a handful of the tax breaks permanent, leaving the fate of others unclear. The White House has threatened to veto the House bills because they would add billions to the budget deficit.

Making all the tax breaks permanent would add more than $1 trillion to the budget deficit over the next decade, according to the Joint Committee on Taxation.


Follow Stephen Ohlemacher on Twitter at http://twitter.com/stephenatap

Think your friends should see this? Share it with them!

Story copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


We also have more stories about:
(click the phrases to see a list)

Category:

Follow Daily Journal:

All content copyright ©2015 Daily Journal, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.