The $622 billion tax extenders package passed the House on a 318-109 vote on Dec. 17, it is expected to pass the Senate on Monday and head to the President’s desk. Business tax breaks such as the research and development credit and Section 179 expensing, along with expansions to household tax credits such as the Earned Income Tax Credit (EITC) were made permanent by the bill.
In total, the bill affects 52 tax breaks and renews a handful of extenders for two to five years. It also has provisions which affect Internal Revenue Service practices and create new rules for real estate investment trusts (REITs) and other issues.
The $622 billion cost of the extenders package will prove to be a boon for tax reform efforts as it increases the budget baseline by $600 billion, making major changes to the tax code easier to institute without impacting the bottom line. Several tax credits which were extended or made permanent are thought to be in a better position to hold up to the scrutiny they would face under any broad tax reform effort.
With respect to potential follow-up to the extenders package, Brady noted “We have other areas of the code that members either wanted included or they felt the language could have been improved, so we’ll keep those discussions going as well. We’ve still got some work to do on the issue.”
Other aspects of the package included an extension of some renewable energy tax credits, which were included in exchange for a lifting of the crude oil export ban. Only the wind and solar industry tax credits made it to the final bill and some Democrats were caught off guard, expecting a fuller slate of such tax credits to be included. Brady has indicated that he is open to discussing the other credits, noting that many will not expire till after 2016 and don’t need to immediately be renewed.