Chairman moves on expired tax breaks

The House’s top tax writer plans to start seeking a “permanent” solution next month for a collection of tax provisions that expired at the end of 2013.
 
House Ways and Means Committee Chairman Dave Camp (R-Mich.) set that time frame — and proposed examining each of the expired tax breaks one by one — in a message to fellow committee members on Monday, as he rolled out a strategy for building on the tax reform draft he released in February.
 
The April time frame puts Camp in line with Senate Finance Committee Chairman Ron Wyden (D-Ore.), who has made dealing with the so-called tax extenders a top priority. Top Democrats in both chambers have also pushed to quickly deal with extenders.
 
{mosads}But Camp’s proposal could also make changes to the budget bottom line that could at least somewhat ease the path toward a broader revamp of the tax code, after the Ways and Means Committee chairman’s draft outlined some of the difficult trade-offs required for reform.
 
One of his priorities, Camp said Monday, would be to “begin advancing permanent legislation through the committee that paves the way for tax reform by making incremental progress towards full reform.”
 
The more than 50 tax breaks that expired at the end of last year include an important credit for research and development, incentives for alternative energy and some very targeted preferences that critics have dubbed corporate pork.
 
K Street and interest groups have lobbied hard to have the tax provisions reauthorized.
 
Still, it remains to be seen how Camp’s desire to deal with extenders more permanently will dovetail with Wyden’s, given that the provisions have generally been authorized for a year or two at a time.
 
The extenders are often dealt with as part of broader legislation, with the last package tucked into the “fiscal-cliff” deal that was signed early in 2013. Many in Washington have thought it unlikely that Congress would enact another extenders deal until after this year’s lame-duck session.
 
“One important goal of tax reform is to provide certainty to American taxpayers. I think we can all agree that a short extension of tax policies is no way to legislate and is even worse for the families and businesses who utilized those tax benefits,” Camp wrote in the memo, which was obtained by The Hill.
 
“As such, beginning in April, the committee will continue its work by going policy by policy to determine which extenders should be made permanent. That process will include both hearings and markups. Specific dates and topics will be forthcoming.”
 
Camp also said in the memo that he would continue to hold bipartisan briefings where Joint Committee on Taxation staffers would delve into the details of his tax reform draft. He expects to hold public hearings on it.
 
On extenders, Camp said he heard from several lawmakers who had pressed for considering certain extenders as part of permanent policy. Treasury Secretary Jack Lew told the Ways and Means Committee this month that the Obama administration had done that by including several temporary provisions as part of its current law baseline.
 
Official congressional budgeting rules assume that the provisions will stay expired, even though many have been brought back on a start-and-stop basis for years.
 
Camp made that same assumption in his draft and even repealed some extenders.
 
But considering some of those provisions permanent would also make both budgeting and tax reform easier, potentially allowing tax writers to keep some of the tax breaks they would otherwise have to scrap.
 
Analysts like those from the Committee for a Responsible Federal Budget have said such an approach would be fiscally irresponsible, an approach House Minority Whip Steny Hoyer (D-Md.) seemed to endorse on Monday.
 
Hoyer said at an event sponsored by Third Way, the centrist Democratic think tank, that Congress needed to address the expired tax breaks. But, he added, “failure to offset the cost of these provisions could add over $900 billion to deficits over the next decade, according to the Congressional Budget Office. That’s larger than the remaining sequester cuts.”
 
Camp has said for years that he wants to deal with extenders as part of his broader efforts to overhaul the tax code.


But Wyden has sought a more proactive approach to the provisions since taking over the Finance Committee in February, after former Chairman Max Baucus (D-Mont.) left Congress to become ambassador to China. A spokeswoman for the Finance Committee chairman has said the panel could hold an extenders vote next month.
 
“I am not going to sacrifice important matters like research and development and innovation on the altar of perhaps some inaction on comprehensive reform,” Wyden told Bloomberg Television in February.

— This story was updated at 5:41 p.m.