Economy

House may vote on one-year tax deal this week

The dome of the U.S. Capitol in Washington D.C.
The dome of the U.S. Capitol in Washington D.C. McClatchy

Senior Republican leaders in the House of Representatives moved ahead Monday on a plan to vote as early this week on a bill to extend dozens of tax provisions that expired at the end of 2013, according to multiple sources.

Among the provisions that have already expired are the ability of taxpayers in states without an income tax to take an equivalent write-off for sales taxes they’ve paid. It also extends popular tax breaks such as the ability of school teachers to write-off a portion of the school supplies they purchase for their classroom.

The possible vote, confirmed earlier by sources familiar with House proceedings and then made public in a procedural step, follows a flurry of activity at the start of Thanksgiving week that saw a House-Senate compromise advance, only to die after the White House threatened to veto the bipartisan deal. That deal covered 55 provisions that expired in 2013 and at least six that expire this year.

The House vote might avoid a big battle over making permanent tax provisions sought by corporations such as the research and development tax credit and faster tax write-offs for purchases of property and equipment. It also does not make permanent Democrat-favored tax credits for working poor, including the Earned Income Tax Credit, set to expire in 2017.

The deal being negotiated last week by outgoing Senate Majority Leader Harry Reid, D-Nevada, and House Ways and Means Committee Chairman Dave Camp, R-Michigan, made the business deductions permanent but did not make permanent the Democrat wish list.

“I actively and publicly opposed last week’s proposal that would have given permanent tax breaks to a relative few, while costing more than $400 billion and leaving out critical provisions that help working families,” Rep. Sander Levin, D-Michigan, the top Democrat on the tax-writing Ways and Means Committee, said in a statement Monday night. “This one-year extension avoids that damaging proposal.”

The absence of key Democrat items angered the liberal wing of the party and prompted President Barack Obama, who has increasingly strained ties with Reid, to issue a veto threat. The president’s executive order last month granting a stay from deportation to millions of unauthorized immigrants also weighed heavily against an appetite for compromise among Republicans, who will control both chambers of Congress come Jan. 6.

If Congress quickly renews the tax provisions that expired in 2013, it will make it easier for the Internal Revenue Service to have its documentation ready in time for taxpayers to file early in 2015 and collect their tax return. That’s also plus for businesses, who crave certainty and predictability.

“While we appreciate the prevention of short term tax hikes and the prevention of a delay in the IRS filing season, we hope the next Congress will work to bring certainty to these provisions, extending them seamlessly and permanently as a bridge to comprehensive tax reform,” Bruce Josten, executive vice president of government affairs for the U.S. Chamber of Commerce, told McClatchy.

Congressional aides, demanding anonymity in order to speak freely, worried that the House measure falls short of a bipartisan deal to extend 2013 and 2014 provisions that cleared in the Senate earlier this year. Next year, Kentucky Republican Mitch McConnell becomes the Senate Majority Leader and haggling over another tax-extension package is not thought to be high on his wish list.

Senate Democrats such as current Finance Committee Chairman Ron Wyden, D-Oregon, have repeatedly voiced opposition to a one-year deal.

-- David Lightman in Washington contributed

.

Related stories from McClatchy DC

  Comments