Tax Incentives’ Extension Package Being Discussed

Congressional leaders and senior White House officials are discussing a major tax incentive extension deal. Negotiations accelerated on a deal that could balloon to $800 billion. Senate Majority Leader Mitch McConnell, R-Ky., said Congress would finish work on “either a couple-a-year tax package or a more robust tax package.” McConnell added, “I lean toward the latter and I hope we can achieve that.”

Importantly, Senate Democratic Leader Harry Reid, D-Nev., wants a big deal as well, hoping to achieve several policy goals that eluded him last year when the White House blew up a tentative deal. Reid said Tuesday the talks have gained new momentum. Reid said, “These tax extenders, many of them are good for business, but those that are good for business are also good for everyday Americans, and each year we do that, they’re not paid for with rare exception. So I don’t know what people are talking about,” he said.

Key to a bigger deal would indefinitely extend the research and development tax credit and the Section 179 deduction for small-business expensing, two Republican priorities also supported by pro-business Democrats. The package would also make open-ended expansions of the child tax credit, the earned income tax credit and the American opportunity tax credit, central pieces of President Obama’s 2009 stimulus package.