Congress routinely allows immense packages of nominally temporary tax incentives, loopholes, deductions, and credits to die, only to revive them over and over again. Collectively known as tax extenders, the current group of 55 tax breaks actually expired at the finish of 2013. But with only a month left to pass tax legislation, Congress is scrambling to come to a deal to extend these breaks retroactively, so they may apply to 2014 and though the next decade. Lots of of the extenders are basically giveaways to choose groups of corporations and individuals that would not be approved were they to be thought about one-by-one.
Misplaced Budget Priorities
The figure below shows the 10-year costs of proposed tax extenders deals. The first deal nearly reached by the Senate and finally scuttled by President Obama’s veto threat would have made a number of the breaks permanent, expanded the research and development tax credit, phased out the
Renewable Electricity Production Tax Credit, and extended most of the rest through 2015. As shown in the first stacked column, these business friendly tax breaks would total $440 billion over ten years. The second stacked column looks at feasible consequence of Congress’s likely fallback plan to extend the expired breaks retroactively for 2014 alone. If Congress were to extend all the breaks that expired in 2013 every year for the next decade, it would total $762 billion. These tax packages are then compared to the 10-year costs of policies that Congress has failed to address, deeming them expensive and unworthy
of an increase in the deficit: a one-year extension of the federal Emergency Unemployment Compensation program, a patch to fill in the Highway Trust Fund’s shortfall for the next decade, and a repeal of the remaining non-defense discretionary sequestration spending cuts.
It is hypocritical for Congress to cite deficit concerns when blocking legislation that would help low- and middle-income Americans, and then to disregard these deficit concerns when thinking about tax extenders overwhelmingly beneficial to massive business.