Is This the End of the Tax Extenders? - Gainesville Coins News
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Is This the End of the Tax Extenders?

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Is This the End of the Tax Extenders?

tax-extendersSince the creation of the first tax extender provisions in 1988, Congress has been able to forgo the process of actual budgeting as the provisions made costs appear lower in the short term. Is that day coming to an end? Amendments to tax legislation, brought forth by the $680 million bill recently passed by lawmakers, might just signal the end of tax extenders.

Several Tax Extenders Made Permanent

tax extenderTax breaks for corporate research and development, the AMT (alternative minimum tax), small businesses, schoolteachers and philanthropists became permanent due to uncharacteristic cooperation between the two parties. Concessions between the Democrats and GOP allowed the approved permanence of one party’s “pet projects” to be paid for (so to speak) by the permanence of the other party’s.

This decision comes as a surprise because it juxtaposes the policymaking of yesteryear wherein an unwillingness to compromise (for the sake of partisanship) has led to slowed and sometimes halted operations. The move also deviates from myopic practices that have allowed Congress to trudge along without addressing the long-term economic concerns of the country.

In other words, rather than resorting to protectionist politics by placing certain tax breaks temporarily off-limits, legislators finally bargained for permanent agreements. This removes some of the needless divisiveness of writing annual tax bills in the future.

Lawmakers, however, have yet to provide an answer for the provisions that did not receive permanence.

Fate of the Remaining Tax Extenders?

taxe extenderOf the remaining provisions, a half-dozen have been extended for the next five years. These are the provisions that garnered only partisan support. They include depreciation (which increases investment writeoffs for equipment purchases), and a credit for industries investing in alternative energy.

The 30 provisions that were not afforded a five-year extension may simply dissolve. These are the provisions whose socioeconomic and political applicability was appreciated by few amongst the legislature—for example tax cuts for film and television productions; a credit for electric motorcycles; and cuts for employers on Indian reservations.

Nevertheless, it would be premature to relegate all of these temporary provisions to the graveyard.

Republican Senator Pat Toomey of Pennsylvania commented, “I don’t think this alone kills [tax extenders] entirely because we have a number of provisions that are simply being extended another two years, so there’s still that list to deal with.”

Maryland's Democratic Senator Ben Cardin of the Finance Committee concedes that some of the remaining provisions will still demand the attention of Congress. He explains that Congress will become more judicious about the expiration and modification of specific provisions. Hopefully, policymaking in the coming years will lend credence to this statement; until then we retain a healthy amount of doubt.

Some speculate that the next president will revise tax policy and thereby get rid of extenders for good.

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