Senate panel votes to renew dozens of expired tax breaks

Author: associated press

WASHINGTON (AP) – The Senate Finance Committee passed a bill Tuesday to renew dozens of temporary tax breaks that expired at the start of the year.

The bill would extend more than 50 tax breaks through 2016, beyond the upcoming presidential election.

The tax breaks benefit big corporations and small businesses, as well as struggling homeowners and people who live in states without a state income tax. More narrow provisions include tax breaks for filmmakers, theatrical productions, racehorse owners and rum producers in Puerto Rico and the Virgin Islands.

The bill would add $95 billion to the budget deficit over the next decade, according to 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.

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.

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.

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