The House will begin consideration Tuesday of a batch of critical business tax breaks that expired last year, but the effort will exclude the vast majority of expired exemptions for businesses and individuals included in a Senate measure.
The House Ways and Means Committee Tuesday plans to consider six expired tax breaks, including a research and development tax credit that aims to help businesses expand and bill to expand tax deductions for business equipment.
The bill covers just a fraction of the more than 40 tax breaks for individuals and businesses that are included in a Senate version, which cleared the Senate Finance Committee earlier this month and could be on the floor for a vote as early as next week.
The Senate legislation includes tax breaks for individuals, including deductions for mortgage interest premiums and higher education expenses. The Senate proposal also revives energy tax credits for electric cars, biofuel production and energy efficient homes.
“We are staking out a different position than the Senate Finance Committee,” a top GOP aide told the Washington Examiner.
The House version is authored by Ways and Means Committee Chairman Dave Camp, R-Mich., who is retiring this year.
Camp wants each tax break considered individually and if lawmakers want to renew them, Camp wants the breaks to be permanent, rather than extended for the typical two years.
“One major goal of tax reform is to provide stable, predictable rules for businesses so that they can grow, create jobs, and increase wages,” Camp said, announcing a hearing on the matter earlier this month. “Congress must end the practice of short-term tax policy, extending important business tax provisions for one or two years at a time makes it very difficult for employers to plan and adds immense confusion and complexity for taxpayers.”
But Camp’s plan is vastly more expensive than the Senate version, which extends the tax breaks for two years at a cost of $85 billion.
Under the Camp plan, the research and development provision alone would cost $155 billion over ten years.
But the House and Senate will eventually have to agree on a compromise if the tax breaks are to be revived this year. With a groundswell of bipartisan support for them, it’s likely the two sides will negotiate a deal and tax policy experts believe the Senate version will prevail.
That’s because the Camp plan centers around major tax reform. The cost of permanently extending some tax breaks was to be offset by other changes in the tax code under a comprehensive reform plan Camp released in March.
But the prospects of major tax reform in an election year have all but vanished, while Camp’s clout has diminished with the announcement of his retirement.
“I think it is going to be very difficult to get many of these provisions made permanent at this point,” Dustin Stamper, director of the Washington national tax office of the accounting firm Grant Thornton, told the Examiner. “It’s more likely we do what we’ve done in years past, where we get some sort of temporary extension of provisions rather than making them permanent. It’s easier to pass everything on a short-term basis.”
In the meantime, House GOP leaders said they will consider at least the research and development tax break in the coming weeks. Camp will also begin considering individual measures to permanently extend some of the individual tax breaks, such as the tax credit for higher education expenses, Camp aides told the Examiner.