House votes to extend $45B in tax deductions
The temporary action would head off a number of increases. A Senate vote is likely next week.
WASHINGTON - The House voted Wednesday to temporarily extend $45 billion in deductions, moving to avoid a potential tax hike that could hit people ranging from schoolteachers, families of college students and taxpayers in states without an income tax to racehorse owners and NASCAR racetrack operators.
The House vote of 378-46 set the stage for a similar move in the Senate, likely next week.
At best, the action would be in force for just the rest of this tax year; the provisions expire at the end of this month, and the fight would play out anew early next year. Senate Finance Committee Chairman Ron Wyden (D., Ore.) threw in the towel Wednesday night on his effort to push a two-year extension.
The chairman for the tax-writing Ways and Means Committee suggested the short-term extension was necessary but not ideal. "Here we are at the end of 2014 retroactively putting in policies for the whole year," said Rep. Dave Camp (R., Mich.).
"The bill is hardly perfect but provides us with a sorely needed stopgap measure," said Rep. Louise Slaughter (D., N.Y.).
Wednesday's vote to restore more than four dozen expired provisions sets the stage for a broader and potentially more complicated tax debate in 2015. Republicans will control both chambers of Congress and may discuss these soon-to-be-expired tax provisions as part of a broader revamp of the corporate tax code.
Absent agreement by Congress and the president, millions of Americans face tax increases when preparing their 2014 tax returns early next year. Some of the tax deductions that hang in the balance are:
Itemized deductions for state and local general sales taxes paid by taxpayers in seven states where they don't have local income taxes to deduct from their federal taxable income: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
A $4,000 deduction of higher education expenses for middle-income Americans.
A $250 deduction for elementary and secondary schoolteachers for school supplies.
A tax deduction for companies, farms and restaurants that donate food to charities.
The three-year tax depreciation for racehorses.
A tax write-off for the first $15 million spent on film and television production.
The seven-year depreciation for land improvements and support facilities at motor-sports complexes.
Until the House and the Senate reach final accord, these tax provisions remain in play. But congressional leaders and staffers from both parties insisted that at minimum an extension covering 2014 would get done next week.
President Obama signaled he would sign the temporary extensions.
"We are open to short-term extensions of these provisions," Obama said Wednesday in a meeting with members of the Business Roundtable, a business group.
The president added he'd like to see some of those tax extensions codified in a broader comprehensive revamp of corporate taxes.
"There is definitely a deal to be done," Obama said.
Bipartisan talks between the two chambers of Congress appeared to be moving toward a two-year deal before Thanksgiving. But the effort fell apart when Obama said he'd veto it because it would make permanent tax breaks sought by corporations while only temporarily extending similar provisions that benefit the working poor.