Senate Finance Committee Chairman Max Baucus said the temporary nature of tax breaks known as extenders is “disastrous” for U.S. companies.
“For businesses to succeed, Congress must provide a stable and certain tax code,” Baucus, a Montana Democrat, said today at a panel hearing in Washington.
About 60 temporary tax breaks expired at the end of 2011 as Congress didn’t act to extend them, including credits for research and development and expanded benefits for transit commuters. Another 41 provisions are slated to lapse at the end of 2012, including a credit for wind energy production.
These tax breaks are gaining more attention as lawmakers seek to extend a payroll tax cut for workers through 2012. That measure may be the last vehicle for major tax legislation until after the November election. Lawmakers will probably wait until after the election to consider the expiring 2001 and 2003 tax cuts on income, capital gains and dividends.
Senator Charles Schumer, a New York Democrat, has said he wants to include an expired provision in the payroll-tax package to allow transit riders to set aside $230 a month before taxes to pay for their mass-transit commutes. The benefit has been capped at $125 a month since the higher amount expired Dec. 31.
He said lawmakers shouldn’t wait until later in the year to act on the benefit because commuters might switch to using their cars instead of mass transit. Workers can set aside $240 before taxes to pay for certain parking expenses.
“Of all the extenders that expire, this is the one that’s hardest to go back and do retroactively,” Schumer said at today’s hearing.
Baucus said he thinks the tax code includes too many temporary provisions. He said at the hearing that eliminating some of these tax breaks may help pay for lowering rates as part of a broader tax overhaul.
“If you’re broadening the base, you have to get rid of some expenditures to lower the rate,” he said. “It’s hard to do.”
To contact the reporter on this story: Steven Sloan in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jodi Schneider at email@example.com