From Daily Tax Report®
December 3, 2015
Dec. 2 — Another one-year or shorter extension of lapsed tax extenders won't be acceptable, said Senate Finance Committee Chairman Orrin G. Hatch (R-Utah).
That happened last year when all the provisions were extended for 2014 only, after talks on making some long-temporary tax credits permanent and continuing others on a short-term basis fell apart (245 DTR G-5, 12/22/14
Hatch said that isn't an acceptable fall-back option if similar talks this year fail to produce an agreement. “It's got to be multi-year,” Hatch told Bloomberg BNA Dec. 2. “We're not going to put up with one year.”
For weeks, lawmakers have continued discussing a possible deal on permanency for popular tax breaks like the business credit for research and development and the Earned Income Tax Credit that households can claim (230 DTR G-5, 12/1/15
But Hatch reiterated that EITC fraud and payment errors need to get reined in, first and foremost, underscoring a common refrain among other Republicans on Capitol Hill. “It's a big problem, about 25 percent fraud,” Hatch said (see related story
in this issue).
EITC permanency is paramount for President Barack Obama and House Minority Leader Nancy Pelosi (D-Calif.), Hatch said.
To claim the EITC, which is available to low-income taxpayers and is based on their earnings and number of children, taxpayers must provide Social Security numbers for themselves, a spouse if filing a joint return and any qualifying children, according to a Congressional Research Service report released Dec. 1. For the other refundable credits such as the additional child tax credit, taxpayers can make claims using a Social Security number or an individual taxpayer identification number, the report said.
Hatch said he remains hopeful for an agreement, a point echoed by House Ways and Means Committee Chairman Kevin Brady (R-Texas).
“We're making a lot of progress,” he told reporters.
But neither he nor Hatch would commit to a deadline to accept the two-year extension Hatch's committee approved earlier this year as a back-up to the permanency discussions. Others in Congress said they are less inclined to forecast an outcome.
“The honest answer is we don't know where things are,” said Ways and Means ranking member Sander M. Levin (D-Mich.).
In contrast to the hand-wringing over what lawmakers might or might not agree to make permanent, many of them seem less concerned about offsetting the cost of extenders of any duration.
Hatch has admitted that the price tag could exceed $500 billion over a decade if a bigger agreement comes together.
Budget hawks outside Congress have reacted negatively.
The deal could cost up to $840 billion in that 10-year period when factoring in interest costs and other considerations beyond the scope of more routine extensions in the past, namely expanding some of the existing provisions in addition to making them permanent, according to an estimate from the Committee for a Responsible Federal Budget.
That would happen with the research and development credit if congressional Republicans get their way.
A House-passed bill (H.R. 880) to expand it and make it permanent would cost $182 billion over a decade, whereas a permanent extension of existing policy would cost $109 billion, according to Joint Committee on Taxation estimates.
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