House panel begins evaluation of expired tax breaks

The House Ways and Means Committee on Wednesday began the process of evaluating tax breaks that expired at the end of 2017.

A hearing of the panel’s tax policy subcommittee kicked off a discussion about whether the expired provisions, commonly known as “tax extenders,” should be made permanent or eliminated in light of the new tax law signed by President Trump in December.

“Starting right now, we’re going to apply a rigorous test to these temporary provisions,” Ways and Means Committee Chairman Kevin Brady (R-Texas) said. “We’re going to take a close look at each of them, asking ourselves and our witnesses, ‘are these provisions truly needed in a modern tax code?’”

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Over the past several years, dozens of narrowly targeted tax breaks have been repeatedly renewed, typically for one- and two-year periods. These provisions pertain to industries including renewable energy, motorsports and horse racing.

The provisions were not addressed in the GOP tax overhaul that President Trump enacted in December. Instead, they were retroactively renewed for 2017 as part of the budget deal Congress passed last month.

More than 20 witnesses testified at Wednesday’s hearing, spread over the course of four panels.

Three of the panels focused on tax incentives — mostly in the energy sector — that witnesses want extended, made permanent and/or improved. The fourth panel consisted of fiscal policy experts from across the political spectrum who were critical of the provisions, extending them retroactively and extending them without paying for them.

Both Republicans and Democrats on the committee said they would like Congress to make a final decision on the extenders and either permanently extend a provision or scrap it altogether.

“Now is the time to examine each one of these provisions one by one to determine whether, now, they fit into the new tax code,” said tax policy subcommittee Chairman Vern Buchanan (R-Fla.).

Buchanan asked the energy-focused witnesses why they still need these incentives when Congress just cut taxes for corporations and pass-through businesses. Many of the witnesses replied that the incentives they want extended go to emerging industries and that parity is needed in the tax code for different types of renewable energy industries.

Buchanan also asked witnesses what they’d be willing to give up in order to have their desired tax break made permanent.

Rep. Lloyd Doggett (Texas), the ranking Democrat on the tax policy subcommittee, said lawmakers should provide certainty about the extenders and should also pay for sealing any of the tax breaks.

“The idea of leaving people year-to-year not only questioning not only whether they’re extended but suspended is not really fair, and it also reduces any incentive value that any of these provisions may have,” he said.

Democrats also used the hearing, in part, to attack the Republicans for rushing the new tax law through Congress.

“My friends on the other side of the aisle rushed a bill to President Trump’s desk for signature without meaningful public debate or analysis,” said Rep. Suzan DelBene (D-Wash.).

“And now, here we are with open questions left about tax extenders as well as all the unclear, hastily crafted provisions in the final law that our constituents and U.S. businesses are now struggling to understand.”