Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Tuesday 03/25/14

Tax Extenders Remain in Limbo

Where are the tax extenders?

The House Ways and Means Committee will take up a series of tax-extender measures in April, according to an a memo from Ways and Means Committee Chairman Dave Camp, R-Mich. Camp stated the committee will go through each of the policies to determine which legislation to advance and will consider permanent tax policy changes for some provisions. Camp stated in his memo that he isn't a fan of short-term tax extensions, calling it "no way to legislate." This integrates into Camp's desire for a more comprehensive tax reform package.

The Senate Finance Committee also could markup a tax-extenders package in early April. Sen. Charles Grassley, R-Iowa, said on a call with agriculture reporters that he only had heard rumors about a committee meeting. Senate Republicans will caucus Wednesday and Grassley said he hoped to hear from Sen. Orrin Hatch, R-Utah, ranking member of the committee. Questions will come up about how those tax credits will be offset in the federal budget. Republicans will advocate for budget cuts while Democrats will push for more revenue.

"But I don't know if it's going to be a fruitful meeting if we don't have the offsets going into the meeting," Grassley said.

Tax extenders have become a popular mechanism for Congress to continue tax breaks while reflecting smaller impacts on the long-term congressional budget scores because the extensions are generally for a year or two. The problem lately has been that tax "extenders" are generally now tax "retros" because Congress will go back and extend a tax credit that expired at the end of the previous year.

This doesn't do much to instill confidence for anyone hoping for a Section 179 deduction or bonus depreciation to offset either income or the cost of some major machinery.

When asked about the wind Protection Tax Credit, Grassley said he thinks all tax extenders should be approved or none at all. Yet, there remains push back on extending the tax credit for wind, particularly from advocates for developing fossil-fuel production. "Wind tends to be a little more controversial than other extenders," Grassley said.

Grassley said it's hard to predict whether tax-extender legislation would move this spring or summer. It's just as likely Congress will drag out the tax debate until the lame-duck session after the fall elections.

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Posted at 9:59AM CDT 03/25/14 by Chris Clayton
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