Lame duck extenders deal turns into a tax turkey
Wednesday, November 26, 2014
Just when it looked like things were going so well with the tax extenders negotiations, the Washington we all know (and some love) reared its political head.
The more than 50 tax breaks that expired at the end of 2013 are likely to stay dead. Or at least that was the situation as of last night.
What happened?
The White House decided the proposal being hammered out by Senate Majority Leader Harry Reid (D-Nev.) and House Ways and Means Chairman Dave Camp (R-Mich.) was a turkey.
The deal, according to the White House, was far too favorable to business interests at the expense of middle-class taxpayers.
If Congress continued in that legislative direction, the bill would never make it into law, warned the Obama Administration.
"The president would veto the proposed deal because it would provide permanent tax breaks to help well-connected corporations while neglecting working families," said White House spokeswoman Jennifer Friedman on Tuesday.
That threat scuttled the deal, at a cost of around $450 billion over 10 years, would have reinstated most of the expired tax breaks retroactively for the 2014 tax year and extended them through 2015.
A permanent tax place: A handful of tax provisions, however, would have been made permanent.
On the business side, the breaks that would have been given a lifetime home in the tax code included an expanded research and development tax credit, a measure allowing small businesses to deduct virtually any investment, deductions for employer-provided mass transit, and four different breaks for corporate and charitable giving.
Individual tax breaks that would have become permanent were the itemized deduction of state and local sales taxes and the American Opportunity Tax Credit to cover college costs.
Notice the difference in how many business breaks were made permanent as compared to individual ones? So did the president and other Democrats.
Many in the president's party also were irked that an expanded Earned Income Tax Credit and a child tax credit for the working poor were dropped from the proposal's permanent list. Word is Republicans axed those provisions as a response to Obama's immigration executive order.
The president, however, made it clear he still gets the final word. Democratic leaders in the House and Senate late Tuesday (Nov. 25) were working to ensure that any veto would be sustained.
So it looks like we're back to square one with extenders. For now.
Stay tuned, though. Things can change quickly when Senators and Representatives are looking at impending holidays.
Turkey photo by Edna Winti via Flickr
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