House nears a vote on tax-break plan
The moves would benefit big corporations as well as small businesses and individuals.
WASHINGTON - Struggling to reach a long-term agreement, House Republicans are weighing a one-year extension of temporary tax breaks affecting millions of businesses and individuals.
Most of the more than 50 tax breaks expired at the end of 2013, so the extension would only run through the end of the month. However, it would allow taxpayers to claim the tax breaks when they file their 2014 tax returns.
The tax breaks benefit big corporations and small businesses, as well as commuters, teachers and people who live in states without a state income tax. In all, they affect about one in six taxpayers, according to the Tax Institute, the independent research arm at tax giant H&R Block.
Senate Democrats and House Republicans were negotiating to make some of the tax breaks permanent. But talks faltered last week after the White House threatened to veto an emerging package, saying it too heavily favored big corporations over families.
Negotiations are continuing. But with the House scheduled to adjourn for the year next week, House Republicans are preparing to vote on the short-term measure, said a House GOP aide who spoke on condition of anonymity.
The House could vote as early as this week, said the aide, who was not authorized to speak publicly about the package ahead of an official announcement.
The IRS has warned that if Congress waits until the last minute to address the tax breaks, it could delay filing season and tax refunds. Each year, millions of families rush to file their returns so they can get quick refunds.
White House spokesman Josh Earnest expressed concerns Monday about a one-year extension, but stopped short of issuing a new veto threat.
"There are significant fiscal consequences for just a one-year extension, instead of a permanent extension," Earnest said.
Congress routinely passes the package of temporary tax breaks every year or two, drawing complaints from business groups that it is hard to plan from year to year.
A one-year package would bring more uncertainty next year. But it could give GOP lawmakers more leverage to eventually shape a long-term plan because Republicans take control of the Senate in January.
Business leaders have been pushing lawmakers to pass a long-term plan in the hope that it would help clear the way for Congress to focus on a broad overhaul of the entire tax code next year. Instead, lawmakers could find themselves replaying old fights over temporary tax breaks.
"I hate to say that it's difficult for Congress to walk and chew gum at the same time, but sometimes it is," said Rachelle Bernstein, vice president and tax counsel for National Retail Federation. "We've been through this over and over again."
Among the biggest breaks for businesses: A tax credit for research and development, an exemption that allows financial companies to shield foreign profits from being taxed by the U.S., and several provisions that allow businesses to write off capital investments more quickly.
The biggest tax break for individuals allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns.