OMAHA (DTN) -- Sen. Charles Grassley says it's bad for the economy if more than 50 tax breaks for businesses are not reauthorized by the end of the year, but the White House might actively oppose a bill unless certain provisions are added for middle-class families.
White House spokesman Josh Earnest on Monday said in his daily briefing that the White House would "strongly oppose" a tax package for corporations, but not specific tax breaks for businesses. The White House wants extended tax relief for college tuition. "Certainly the administration would not be supportive of a package that provides relief to corporations without providing relief to middle-class families," Earnest said.
Sen. Charles Grassley, R-Iowa, told reporters on Tuesday that leaders from the House Ways & Means Committee and the Senate Finance Committee are working on an agreement that would potentially send identical tax-extender bills to the floor in both chambers. Grassley thinks the tax package would be retroactive for all of 2014 and cover 2015 as well to avoid this same debate a year from now.
"I think if they reach an agreement, it's going to be for 2014 and 2015," Grassley said. "If they only reach an agreement for 2014, it's bad for the economy."
Grassley noted the lack of certainty for 2014 has been bad for both the wind and biodiesel industries that have awaited renewal of their tax credits. He also said the lack of better business deductions has hurt manufacturers such as John Deere Co.
The senator noted that the longer it takes Congress to approve a package, the more stress there will be on the IRS to update computers, manuals and staff to implement those provisions. Tax season likely will start late if Congress gets a tax package done.
"The fact that we put this off until December is going to delay people filing," Grassley said. He added, "Will it get done? I sure hope so, and I'm going to push that it gets done."
Grassley thinks the tax-extender bill could prompt Congress to be in after mid-December despite a push to adjourn by Dec. 11. "It brings it up really to the edge where hopefully things happen. If it doesn't happen, it's going to be bad for the economy."
A key for farmers is the Section 179 deduction on business equipment. A $500,000 deduction expired at the end of last year and was lowered to $25,000 for 2014. Farm groups and others want Congress to reinstate the $500,000 deduction as well as reinstate 50% bonus depreciation for other business machinery.
DTN's 360 poll this week asks how important it is for Congress to increase limits on Section 179 deductions to $500,000 from the current $25,000. Of nearly 300 respondents thus far, 53% said it was "extremely important" that Congress act and another 27% said it is "significant" to their operations that Congress increase the Section 179 limits.
A Senate bill being used as a blue print for tax extensions also would reinstate the $1.01-per-gallon cellulosic biofuels producer tax credit through 2015. It also would extend the $1-a-gallon biodiesel tax credit as well as the 10-cent-a-gallon agri-biodiesel producer tax credit.
Congress is out of session this week, but will return to D.C. early next week to continue the lame-duck session.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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