http://www.nytimes.com/2014/11/26/business/congress-nears-deal-on-major-business-tax-breaks.htmlThere were 55 tax breaks and credits that expired last year (
when exactly? Can't find a date) that, if not renewed by December 31st, cannot be claimed this year, and the IRS is warning that this could cause some major headaches come tax filing time in early 2015. It's worth a cool $440 billion bucks over 10 years, and there were secret negotiations between Harry Reid and GOP leadership.
Obama has threatened to veto it, saying it was too friendly to corporations, while Congressional Dems flipped when they learned about the details of the negotiations, saying Reid was being too generous to the GOP.
Some provisions:
- would make permanent 10 provisions, including an expanded research and development tax credit, which businesses and the Obama administration have wanted to make permanent for years (worth $15.6 billion per year)
- a measure allowing small businesses to deduct virtually any investment (worth $7.3 billion per year)
- the deduction for state and local sales taxes
- the American Opportunity Tax Credit for college costs (worth $9.7 billion per year)
- deductions for employer-provided mass transit
- four different breaks for corporate and charitable giving (worth $1.6 billion per year)
- Smaller measures already passed by the Senate Finance Committee, from tax breaks for car-racing tracks to benefits for racehorse owners, would be extended for one year and retroactively renewed for the current tax year
- The tax credit for wind power, a Democratic priority, would phase out and end after 2017
- tax credits for biodiesel
- tax credits for coal produced in Native American communities
- breaks for energy efficient homes and commercial buildings
The real deal-breaker for Congressional Dems is that the deal would exclude making the Earned Income Tax Credit's recent expansion permanent and the Child Tax Credit (they actually expire in 2017). Republicans cite Obama's recent immigration order for opposition, saying that more undocumented immigrants would take advantage of it (tax aides for both parties agree that this will happen). Republicans also say Obama pushed for many expanded business and research credits initially, but now he has reversed his position.
Interestingly, the deficit hawk politicians are nowhere to be found, as this would require $44 billion in offsets per year in either spending cuts and/or tax increases elsewhere. "The price tag is a result of irresponsible horse trading whereby each side got to claim its favorite tax break without paying for it," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for lower deficits.
A possible solution is that the new Republican Congress will pass this bill in January when the new Congress convenes, which means the Democrats will be in a weaker position to negotiate.
