Time to punt? Congressional taxwriters may be on the verge of giving up on passing any permanent extensions of the perpetually-expiring tax provisions this year. It is reported they may go for a two-year extension this week. Tax Analysts reports on comments from House Ways and Means Chairman Kevin Brady ($link):
House Ways and Means Republicans are expected to introduce a two-year tax extenders bill as talks continue on a permanent extenders package without a clear solution, committee Chair Kevin Brady, R-Texas, told reporters on December 7.
“The clock is ticking. We are not going to let the extenders fail before we leave town,” Brady said. Republicans want to make sure they are ready this week with a “fallback” if an agreement isn’t reached between the parties, he said earlier.
They are scheduled to adjourn and leave town Friday, so things will need to happen quickly. The story reports that Senate Finance Committee Chairman Orrin Hatch expects the House to pass a two-year extension.
They had been working to permanently extend at least the research credit and the $500,000 Section 179 deduction, but the Democratic negotiators insistence on expansion of the earned income credit as part of any deal may doom the permanent effort.
Some of the Lazarus provisions that died at the end of 2014 and need to be extended to be available for 2015 filings include:
-The $500,000 limit for Section 179 deductions for otherwise capitalized capital expenditures. The limit will otherwise be $25,000.
-The research credit.
-The ability to roll up to $100,000 from an IRA directly to charity without it going through the 1040 first.
The full list is here.
Failure, of course, remains an option. The pre-recess crush makes getting anything done uncertain. House Majority Leader McCarthy is quoted as saying that he has a “fear” that the extenders won’t pass. In that case, we may have a retroactive package passed in January, delaying filing season, or no extender bill at all.
No Iowa Tax Reform again this year. That’s the word from the Iowa Taxpayers Association annual legislative forum, reports the Waterloo-Cedar Falls Courier:
At the Iowa Taxpayers Association’s annual legislative leadership forum, held Friday at Prairie Meadows in Altoona, Democratic and Republican leaders said there is not sufficient state revenue to support new tax breaks or policy changes that would remove money from the budget pie.
“Obviously, when you’re working on tight budget margins, the opportunity for tax reform becomes increasingly difficult,” said Rep. Chris Hagenow, R-Windsor Heights, the new House Majority Leader.
“I’m just going to be very frank: I don’t see this session producing any tax policy changes,” Jochum said. “In terms of any big, new policy changes in taxes … I truly do not see any of that happening.”
That’s no surprise. The continuing split of control between the parties, the resulting ability of either side to veto any tax reform efforts, and seemingly irreconcilable views on tax policy would probably doom any tax reform effort regardless of the budget numbers. The best we can hope is that work continues behind the scenes for when the political climate for tax reform improves. The Tax Update’s Quick and Dirty Iowa Tax Reform Plan is ready whenever they are.
Robert D. Flach has fresh Tuesday Buzz, with links including discussion of the futility of regulating the law-abiding to stop the crooks, a lesson with broad application.
Paul Neiffer, Additional De-Minimis Election Update. “Therefore, if a sole proprietor farmer or rancher purchases a large amount of assets that individually cost less than $2,500 AND these assets are likely to appreciate in value, it may be better to not make the de-minimis election for that year.”
TaxGrrrl, Wal-Mart Sues Puerto Rico Over ‘Astonishing And Unsustainable’ Tax Increase. To go with astonishing and unsustainable government spending.
Jack Townsend, New Transportion Bill, FAST, Adds Some Tax Provisions
Of course it does. State Wants Its Share Of The Sharing Economy (Peter Reilly) “This appears to be one of the rare instances where I am providing you breaking news on a matter otherwise neglected by the tax blogosphere.” Au contraire,
The Finnish government is currently drawing up plans to introduce a national basic income. A final proposal won’t be presented until November 2016, but if all goes to schedule, Finland will scrap all existing benefits and instead hand out €800 ($870) per month—to everyone.
This would deal with the problem of high implicit marginal tax rates that make it too expensive for low-income Finns to go to work — a problem that also exists in the U.S., as Arnold Kling and others have noted.
It may sound counterintuitive, but the proposal is meant to tackle unemployment. Finland’s unemployment rate is at a 15-year high, at 9.53% and a basic income would allow people to take on low-paying jobs without personal cost. At the moment, a temporary job results in lower welfare benefits, which can lead to an overall drop in income.
TaxProf, The IRS Scandal, Day 943. Paul Caron telegraphs an end to this important series. Even when the Tax Prof’s daily coverage ends, the scandal remains unresolved, and Commissioner Koskinen and the administration continue to run out the clock, to the continuing damage of the IRS and to taxpayer service.
Scott Greenberg, A Lesson of Hanukkah: It’s Difficult to Determine Asset Lives: “To spell out the lesson of the story more slowly – the Maccabees came into possession of an asset (a jar of oil). They thought it would lose its value over a certain time period (a single day). However, the asset actually took much longer to depreciate (eight days).”
Stop the presses. Donald Trump Tweeted Something About Tax Shelters (Caleb Newquist, Going Concern).