Tick, Tock: Another 40 Tax Provisions Nearing Expiration
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Tick, tock…tick tock. The expiration date on another round of tax extenders is quickly approaching. Come December, 40 tax extenders will lapse unless Congress acts. This comes after some 60 tax extenders expired in December 2011.
Today, the House Ways and Means Committee, Congress’ tax-writing panel, held hearings on tax extenders. Let’s hope that today’s discussion is not just more of the same talk, but, rather, a constructive step toward renewing these important tax provisions.
Businesses have come to rely on the continual renew of these provisions in planning for future investment and expansion. Many of the provisions are longstanding pieces of the tax code. For example, the active financing exception has been in the code for 91 of the last 102 years; the R&D tax credit has been in the code for 30 years. Letting them expire would hurt our economy in a number of ways.
First, tax extenders spur growth. Provisions targeted to quicker cost recovery puts cash in the pockets of business to create jobs and make capital investments. The 15-year depreciation period for restaurants and retailers, the credit for film production, and the railroad tax maintenance credit are essential to providing the access to capital businesses require to succeed.
Second, extenders spur innovation. The energy efficient appliance credit, the biofuels credit, and the wind credit are critical to developing new sources of energy.
Third, extenders help U.S. companies compete globally. The active finance exception and the CFC look through rules seek to alleviate the double taxation American worldwide companies face under our punitive worldwide system of taxation, providing our companies a level playing field with their foreign competitors.
Finally, tax extenders encourage hiring and provide savings to government. The Work Opportunity Tax Credit, which provides a reduction in tax liability for private sector employers who hire unemployed veterans and those on public assistance, reduces federal and state government public assistance payments.
One day, when Congress gets around to enacting comprehensive, fundamental tax reform, there might not be a need for tax extenders. But until then, they are vital to our economy, and Congress must act now to extend them.