For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
Nov. 30 — The research and development tax credit stands a better chance of becoming permanent than other provisions that benefit businesses, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said.
He and others want more, but nothing is final, Hatch said when quizzed by reporters about the possibilities being hashed out in ongoing talks on the more than 50 expired tax breaks called extenders.
Congressional staff also cautioned against putting too much stock in a list of potential extender outcomes circulated among tax lobbyists.
“We'll be lucky if we can get the R&D tax credit permanent,” Hatch said Nov. 30, the first day back from the congressional Thanksgiving recess. “We'll try to get others, but there's a limit to everything.”
There doesn't appear to be a restriction on paying for whatever deal shakes out in the end. Hatch said he expects no offsets despite a price tag that he predicted could tack more than $500 billion onto the federal deficit, although he acknowledged reticence among some House Republicans about raising costs too high.
“Let's do the art of the doable,” he said. “That's what I'm trying to do.”
The discussions seem to be centered on permanency for some business extenders such as the R&D credit, accelerated expensing under Section 179 of the U.S. tax code and deductions for state and local sales taxes, as well as permanency for some household benefits including the Earned Income Tax Credit and Child Tax Credit, and shorter-term extensions for numerous other long-temporary, often-renewed tax breaks.
Hatch said he expects some resolution on minimizing abuse associated with the Earned Income Tax Credit in exchange for making it permanent, something Democrats have pushed despite disagreement on how to address fraud.
EITC fraud amounted to $17.7 billion in the last federal fiscal year, meaning it has the highest improper payment rate among federal payment programs, said Sen. James Lankford (R-Okla.). He spotlighted that abuse and some wasteful spending through the tax code in a new document on what he called government waste.
Lankford also called out the American Opportunity Tax Credit and tax-exempt federal bond issuance for stadiums as wasteful, as well as subsidies for biofuel, coal production and wind energy. Existing tax credits for wind energy production would get phased out in the extenders deal and childless workers won't be included among those who currently qualify for the EITC, Hatch said, though he declined to offer much additional specificity on hang-ups in the continuing talks.
“We're in the middle of it, so I don't particularly want to talk about that,” he said. “I think we'll get it done. There are a lot of people that want to get that done.”
Aides to Hatch and other lawmakers on his panel and the House Ways and Means Committee worked throughout the break and reportedly over this past weekend on extenders. In addition, Ways and Means Republicans huddled late Nov. 30 behind closed doors.
Serious talks continue to center on a mix of temporary and permanent tax provisions and fraud, Ways and Means Chairman Kevin Brady (R-Texas) told reporters after the meeting, adding that negotiators narrowed the issues involved during the weeklong recess.
Time is running short for a deal to come together before the Senate's scheduled adjournment for the year on Dec. 11 and the House's planned exit on Dec. 18, so Hatch and others admitted the pressure.
“In these situations, it's always coming down to the last week to see what mix we're able to get,” House Majority Leader Kevin McCarthy (R-Calif.) told reporters.
In terms of process, Hatch said the talks have not yet determined whether to push a stand-alone tax bill or attach extenders to other legislation that lawmakers are trying to move before the end of the year, including an omnibus spending package or the highway bill.
A delay in the Affordable Care Act's tax on high-cost health insurance, known as the Cadillac tax, would be included in the final agreement, Hatch said. Changing the ACA's risk corridors has been discussed but Hatch said he didn't know if that would happen in this deal.
Issues around bonus depreciation, which lets businesses deduct half the cost of qualifying property in the year they put it into service, are being “heavily fought,” Hatch said. Numerous tax lobbyists have said they expect it will be allowed to sunset rather than be made permanent.
Hatch said his optimism stems from better dealings this year with congressional Democrats and White House officials than last year, when a deal for permanency around select extenders nearly came together. But if the talks break down again, Hatch said he would push a two-year extenders renewal, which his committee approved this summer.
With assistance from Marc Heller in Washington.
To contact the reporter on this story: Aaron E. Lorenzo in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Brett Ferguson at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)