Tax Breaks for Broadway, Teachers, Banks Advance in SenateRichard Rubin
The Senate Finance Committee approved a package of about $97 billion in U.S. tax breaks, trying to revive dozens of incentives that lapsed at the end of 2014 and give them temporary life through 2016.
The winners in the plan, approved 23-3 by the committee Tuesday, include Broadway producers, big banks and wind-energy companies. Most of the cost comes from a few large tax breaks such as the research and development tax credit, said Republican Orrin Hatch of Utah, the committee’s chairman.
“Each of these provisions have large constituencies and all of them have broad support here in Congress,” Hatch said.
The vote is Congress’s latest attempt to address what’s known in Washington as “tax extenders,” a collection of breaks too expensive or controversial to make permanent but too popular to eliminate.
Instead, Congress routinely keeps the breaks alive, scratching out one expiration date and replacing it with another. That’s happening again this year -- more than six months after the breaks expired and lost much of their value as incentives.
“The economy would get as much use out of spending those billions in 8-track tapes and pocket pagers,” said Senator Ron Wyden of Oregon, the top Democrat on the committee.
Another short-term extension is the exact opposite of what lawmakers say they want. They say they prefer permanent policy, achieved through a revamp of the U.S. tax code that lawmakers have been promising for years.
Tuesday’s bill says so specifically, expressing the “sense of the Senate that Congress should pursue comprehensive tax reform that eliminates temporary provisions from the tax code, thus making permanent those provisions that merit such treatment and allowing others to expire.”
Congress and President Barack Obama can’t agree on much more than that general sentiment, and that’s led lawmakers to another temporary bill.
“While we sit and talk about tax reform, the rest of the world is moving,” said Virginia Democrat Mark Warner.
His attempt to scale back bonus depreciation failed without a vote amid objections from manufacturing-state senators in both parties. The same fate befell attempts by Pennsylvania Republican Pat Toomey to stop the production tax credit for wind energy.
The most significant breaks in Tuesday’s package include the research and development tax credit, the wind energy break, the extension of bonus depreciation for capital investments and a rule that lets U.S.-based multinational banks such as Citigroup Inc. defer taxes on their overseas financing income.
Hatch made a few changes. At the request of Democratic Senator Charles Schumer of New York, he included Broadway shows in a tax break that speeds up deductions for film and television productions and added bike-share expenses to a break for commuters.
Other incentives, including faster write-offs for small businesses and a deduction for teachers’ out-of-pocket expenses, were adjusted for inflation.
The updated bill released Tuesday includes a few revenue-raising provisions. The net cost is about $170 billion over the first two years and approximately $95 billion over a decade, with a few small revenue-raising provisions lowering the net cost. The latter amount is smaller because accelerated depreciation moves up deductions to this year and next.
The package’s ultimate fate this year is unclear. Majority Leader Mitch McConnell hasn’t said when the full Senate will vote, and the House has taken a different approach.
The House has voted to make some breaks permanent, including the research credit and a provision that makes it easier to donate balances from retirement accounts directly to charity. The House has been silent on others, including the wind tax credit opposed by many conservatives.
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