GOP could take tougher line on tax extenders

The House Republican Conference could take a harder line on extending a raft of expired tax breaks after this week’s election, a top Republican aide said Thursday. 

George Callas, a senior aide to House Ways and Means Chairman Dave Camp (R-Mich.), said that he didn’t think House Republicans could get behind restoring most of the expired breaks, commonly known as “tax extenders,” for two years.

The Senate Finance Committee has crafted just such a bipartisan measure. But House Republicans have pushed in recent months to indefinitely revive some of the so-called “tax extenders” — like the credit for business research and provisions for business expensing.

“I’m not even sure the House, especially after the election, can do a two-year bill,” Callas, the staff director for the Ways and Means subcommittee on taxes, said at a post-election Bloomberg BNA event sponsored by KPMG. “Looking at the lay of the land, I think a two-year bill that didn’t get any permanence would be a very heavy lift in the House.”

Those comments suggest that signing off on a two-year extension of the expired tax breaks might not be as routine as it has been in the past.

Most of the tax breaks lapsed at the end of 2013, and would be restored through 2015 under the Senate legislation. Callas also suggested the House could be open to extending some of the GOP priorities for longer than two years, but not indefinitely.

Still, both Democratic and GOP aides appearing at the seminar expressed confidence that some sort of a deal would emerge before the end of December.

House GOP aides have for weeks thought that they would have more leverage in making some of the extenders permanent if Republicans captured the Senate this month.

There’s also been some chatter on Capitol Hill about potentially trading some of the provisions that the House has passed indefinitely for permanent Democratic priorities, like incentives for higher education and low-income families.

But other aides and lobbyists also say they expect Congress to fall back on the easiest approach before year’s end — passing the two-year extenders bill from Senate Finance. GOP leaders in both chambers have suggested they want to clear the decks of outstanding legislation in the lame-duck session before Republicans take full control of Congress in 2015.

Jim Lyons, a top tax staffer for Senate Finance Republicans, said that the incoming chairman of the panel, Sen. Orrin Hatch (R-Utah), was interested in making some of the extenders for the long haul.

But Lyons also insisted that a deal needed to get done before the end of 2014. If not, he said, the tax season would likely be delayed or companies and individuals would face even more uncertainty about the fate of the expired provisions.

“Neither of those seems optimal,” Lyons said.

Democrats said Thursday that they expected Republicans to push for more long-term extensions of some expired provisions, but didn’t show much interest in that approach.

Cathy Koch, the top tax aide to Senate Majority Leader Harry Reid (D-Nev.), dismissed another idea that’s been discussed — extending the provisions just through 2014.

She added that lawmakers would have to consider the costs of the various proposals to revive the expired tax breaks. The House GOP proposal to extend the research and development credit without an expiration date, for instance, costs roughly $155 billion over a decade.

“I kind of think that at least in the Senate we can come to a solution probably fairly quickly,” Koch said. “Probably the rub is going to be when we sit down with House counterparts.”