In a change of pace from its usual practice, Congress is allowing a group of temporary tax provisions known as “extenders” to expire at the end of the year.
The extenders, like other tax expenditures, are federal subsidies that encourage certain behaviors, complicate the tax code and favor some taxpayers over others. Congress has generally extended them for at least another year, although this has sometimes been done retroactively.
Federal budget projections, based on current law, assume the extenders will expire. Renewing the 55 provisions that are slated to expire at year’s end would reduce revenues, and thus increase the deficit, by an estimated $54.2 billion in the coming year.
If Congress were to also renew the expiring provisions over the next decade, it would increase the deficit by $931 billion.
Last week Senate Finance Committee Chair Max Baucus (D-Mont.) and House Ways and Means Committee Chair Dave Camp (R-Mich.) both came out against renewing the extenders for another year. This could get the business community more invested in fixing the entire tax code rather than just focusing on the renewal of tax provisions that benefit individual industries.
“If they’re going to do tax reform, this is a great way to start,” Robert L. Bixby, executive director of The Concord Coalition, said in a recent Washington Times story. “In tax reform, the classic idea is to broaden the base and lower rates. This is a great way to help broaden the base. It may be the only tax reform that we’re going to get in the next few years, and I think it would be a good thing to do.”
External links:
CBO and JCT Extenders Cost Estimate
List of Expiring Tax Provisions (JCT)
Budget Savings Will Come From Expired Tax Breaks (Washington Times)
