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Dec. 9 — Talks to permanently extend a number of popular business and household tax breaks haven't ended despite squabbling over the same stumbling blocks for days, if not longer.
Congressional Republicans and Democrats have backup plans but they don't need them for now, with legislative business sliding into the week of Dec. 14. In the meantime, they will continue to try for more ambitious goals, including permanency for accelerated depreciation; the research and development tax credit; deductions for state and local sales taxes and teachers' expenses; and the Earned Income Tax Credit, Child Tax Credit and American Opportunity Tax Credit.
“As long as we're narrowing the issues, and keeping the discussion going in a positive way, we'll stay at the table,” said House Ways and Means Committee Chairman Kevin Brady (R-Texas).
Once the demands expand too far, lawmakers will concede and take a new path, as happened a year ago when permanent extenders talks broke down and a retroactive, one-year renewal was enacted. This year's push by House Minority Leader Nancy Pelosi (D-Calif.) to index the Child Tax Credit to inflation as part of any deal on extenders remains problematic, Brady told reporters Dec. 9, adding that he views the index issue as extraneous to the extenders package and provisions.
“Glad to have that debate or discussion in the future,” Brady said, “but right now we really need to stay focused on permanency.”
It remains to be seen whether extenders legislation will be paired with the still-developing federal spending bill for the 2016 fiscal year.
But doing so would sweeten that funding measure once it comes together, House Appropriations Committee Chairman Harold Rogers (R-Ky.) said.
“That's being discussed and I don't know where that is,” he told reporters before introducing a stopgap, five-day funding measure to extend the current continuing resolution beyond its expiration on Dec. 11. “I think it would help. I think it would help us.”
Democratic votes seem necessary for extenders, said Rep. Pat Tiberi (R-Ohio), a senior Ways and Means member.
The permanency plans look beneficial for both parties, even without indexing the Child Tax Credit, Tiberi told reporters, and some Democrats across the Capitol have agreed that the index isn't needed now.
“Even if it can't happen, we have the opportunity to make the best anti-poverty program that's lifted working families out of poverty permanent, which is worth doing in my judgment,” Sen. Debbie Stabenow (D-Mich.), a Senate Finance Committee member, told reporters. “If we could go farther, I'd love it, but for me, I don't want to make the perfect the enemy of the good.”
Tiberi and other lawmakers said they didn't have a cost estimate for indexing a permanent Child Tax Credit to inflation, but it could add up to $70 billion over a decade, according to comments by lobbyist Bob Rapoza, founder and president of Rapoza Associates, at an event on the New Markets Tax Credit.
Brady's backup legislation with a two-year renewal for the more than 50 extenders plus other tax language, including restrictions on companies’ tax-free spinoffs into real estate investment trusts and lighter taxes on foreign investment in U.S. property, would cost $108.4 billion over 10 years based on a Joint Committee on Taxation estimate. It has yet to be scheduled for consideration by the House Rules Committee.
Brady said he is still weighing whether to add language to delay the Affordable Care Act's tax on medical devices and its tax on high-cost health insurance, known as the Cadillac tax, through the rules committee.
“There's clearly a lot of member support for a pause in those two areas, bipartisan support,” he said, “so we'll just see how the process continues.”
But one thing looks clear: If Congress falls back on Brady's backup bill or the extenders package passed earlier this year by the Senate Finance Committee—both of which would renew the lapsed tax breaks for this year and next year—neither would address the Earned Income Tax Credit and Child Tax Credit.
With assistance from Casey Wooten in Washington.
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