The House is set to consider HR 5771, the Tax Increase Prevention Act today. The measure would retroactively extend more than 50 expired tax breaks for one year. It would renew the individual deduction for state and local sales taxes and the equalization of tax-free benefits for transit and parking, the business research and development tax credit, bonus depreciation and other expensing rules along with the work opportunity tax credit.
Most of the renewed tax extenders, notably the R&D and tuition tax credits, expired at the end of calendar year 2013. In total, Joint Committee on Taxation (JCT) estimates that the tax extenders would reduce revenue by $41.6 billion over 10 years.
These provisions expired on December 31, 2013, but will receive a one year extension. Originally, Senate Democratic leaders began negotiations with House Republicans on a potential deal on extenders that would renew most for two years and make a number of provisions permanent — at an overall cost of more than $400 billion over 10 years. The White House, however, last week announced that the President would veto such a deal because, while it made certain business tax breaks permanent, it would not permanently extend tax provisions for the working poor such as the expanded earned income tax credit and child tax credit. These provisions were last extended in January 2013 in the American Taxpayer Relief Act, which was the measure to avert the fiscal cliff.
Tax reform is expected to be a central focus for the next Congress. In coming Chairman of the tax-writing Ways and Means Committee, Rep. Paul Ryan (R-WI) has announced his intention to examine and reform the nation’s tax structure.
Update: The measure passed by a vote of 378-46.