Taxes - Extending Expiring Tax Breaks

Allison Glatfelter, Senior Analyst Wednesday October 22nd 2014

Portions of tax legislation expire all the time as Congress often passes temporary tax incentives.  A number of recent tax incentives were added to combat the recession around 2008, other temporary tax incentives are often enacted to help certain new or struggling industries and in general to encourage economic growth.  According to the Senate finance committee 128 tax incentives are set to expire this year. This year both the House and the Senate have introduced bills to further extend or even make permanent certain expiring tax incentives and provisions.  While many in Congress support the idea of extending these incentives, especially in an election year, House Democrats, some Republicans and the President do not support this legislation.   These groups say that these proposals contain no cost offsetting measures, meaning their extension or passage are adding billions to the federal deficit.

The House has passed a number of tax bills that permanently extend once temporary tax credits.  The President’s veto threat has made their Senate progress slow.  H.R. 4438: American Research and Competitiveness Act of 2014 is a bill to make the often extended R&D tax credit permanent at a cost of $156 billion over the next ten years. The House also passed H.R.4718, the Bonus Depreciation Act, which made permanent a tax credit that allows businesses to instantly deduct the costs of business equipment purchases.  If enacted H.R.4718 would have a cost of $287 billion over the next ten years.  The Senate has also worked on a bill that contains a number of tax extenders.  This bill S.2260 the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act was reported out of the Senate Finance Committee but the President’s possible veto of this legislation has prevented the Senate from considering this legislation on the Senate floor.

 While none of these tax bills passed both Chambers before the midterm elections, there is some speculation that they could move during a lameduck session or in the next Congress if Republicans gain control of the Senate.

A complete listing of related bills in Congress

  1. S.2260 - The Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, sponsored by Sen. Ron Wyden (D-OR) is a bill to extend certain expiring tax provisions. (Reported by Committee 4/28/2014)
  2. H.R.4438 - H.R. 4438: American Research and Competitiveness Act of 2014,  sponsored by Rep. Kevin Brady (R-TX): makes permanent the research and development or R&D tax credit. (Passed 5/9/2014)
  3. H.R.4718 - The Bonus Depreciation Act,  sponsored by Patrick “Pat” Tiberi (R-OH): would make permanent an expiring tax incentive that allows businesses to deduct the cost of business related equipment purchases. (Passed House 6/11/2014)
  4. HR 2807 - Conservation Easement Incentive Act of 2013, sponsored by Rep. Jim Gerlach (R-PA) is a bill to make permanent an expiring tax incentive related to the giving of lands to chartable land trusts. (Passed House 5/29/2014)
  5. H.R. 4457 - America’s Small Business Tax Relief Act of 2014,  sponsored by Patrick “Pat” Tiberi (R-OH):  is a bill to permanently extend the ability of small and medium business owners to deduct the cost of some qualifying business purchases from their yearly taxes. (Passed the House 6/12/14)

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