by Mitch Kokai
Senior Political Analyst, John Locke Foundation
House Republicans are preparing for an inevitable showdown over temporary tax breaks known as “extenders.”
The House is set to vote Thursday and Friday on two legislative packages that would make permanent expired temporary tax breaks for charitable contributions and deductions for investments made by small businesses. Those measures would cost the Treasury $2.2 billion and $79 billion, respectively, over the next 10 years.
By making the breaks permanent, House Ways and Means Chairman Paul Ryan and House Republicans are repeating an exercise conducted by former chairman Dave Camp of Michigan last year, which was abandoned in a last-minute deal between Republicans and Democrats in December that left no one happy. Then, the House and Senate passed a $42 billion bill to extend 50-plus tax breaks that expired at the end of 2013 for just two weeks, through the end of 2014.
On Jan. 1 the tax provisions all expired again, leaving Congress to determine whether to repeat the process, make the provisions permanent, or aim for overall tax reform.
For now, the House is aiming to make them permanent.
“Why do we have to play this game of wait until the deadline in order to pass these things?” asked Rep. Tom Reed, R-N.Y., the sponsor of the package of breaks for charitable giving. “Let’s just do it, and get it done permanently.”
That strategy, however, is at odds with the professed goal of the Obama administration, Ryan and Senate Finance Committee Chairman Orrin Hatch, R-Utah, of achieving comprehensive tax reform. A broader overhaul of the tax code would eliminate breaks and deductions to lower tax rates.
Nevertheless, Reed said passing a permanent version of the breaks now “helps us overall to advance the cause of tax reform, and I think it can be indicative of us moving the ball to the finish line on overall tax reform.”