As they prepare to take the reins in the Senate in January, Republican leaders say there’s something the chamber can accomplish before the end of the current Congress: forging a deal with Democrats on renewing expired tax breaks.
Republican leaders have signaled an interest in renewing dozens of expired tax provisions before they take control of the Senate in January.
Sen. Mitch McConnell (R-KY), who last week was unanimously elected to take over as Senate majority leader when the 114th Congress convenes, listed a government spending bill and tax extenders as top priorities for the lame-duck session that started Nov. 12.
Progress has been stalled this year on how to revive dozens of popular tax extenders, for both corporations and individuals, that expired at the end of 2013. House Republicans have sought to make several corporate tax breaks permanent—including the business credit for research and development—while Senate Democrats have favored the EXPIRE Act, a bill introduced by Senate Finance Committee Chairman Ron Wyden (D-OR) that continues almost all of the tax extenders through 2015.
At a press conference in Louisville last week following his reelection, McConnell said the outgoing Congress should set a positive tone for 2015 and focus on clearing a tax extenders package in the remaining weeks of this year.
“There’s a whole lot of unfinished business sitting there, some of which it might be advantageous to get out of the way,” McConnell told reporters. “The Democrats may want to do [tax extenders], and we may want to do it in order to clear off some of the necessary work that’s simply been undone in the dysfunctional Senate.”
Wyden told Politico this week that Democratic tax writers “know that we’re in a negotiation” and that he’s willing to consider making some of the tax provisions permanent, specifically mentioning the R&D credit.
But Republicans are also getting pressure from influential conservative groups to capitalize on their election victory by killing off some of the tax extenders they don’t like, such as the wind production tax credit that is seen as part of the Obama administration’s environmental agenda.
IRS Commissioner John Koskinen warned lawmakers last week that if Congress does not address tax extenders before December, it could greatly complicate the tax-filing season and delay tax refunds.
Last month, the American Institute of CPAs raised similar concerns: Troy Lewis, incoming chair of AICPA’s Tax Executive Committee, told Bloomberg BNA that the uncertainly around tax extenders “is a challenge beyond measure at this point.We really are paralyzed as to what to say. Clients caught in a no-man’s land will do nothing. It’s not healthy for the economy and for the country.”