House Ways and Means Committee Holds Hearing on Tax Extenders

Both the Committee and the Witnesses stated the obvious point that tax reform is important and probably critical with 100 expired or expiring tax provisions on the to-do list. The hearing witnesses were limited to members of the House who had introduced or cosponsored tax legislation that included “tax extender” items this Congress.  The member witnesses made it clear how difficult comprehensive tax reform will be; each had tax breaks that they wanted to protect and/or promote. This hearing did not focus on the extension of the "Bush Tax Cuts" which reduced rates on income, it did not focus on the Alternative Minimum Tax and it did not focus on the payroll tax cut.  The hearing did focus on a variety of previously extended temporary tax provisions, commonly referred to as "tax extenders" which affect individuals, businesses, charitable giving, energy, community development and disaster relief.  These provisions have been extended in omnibus "tax extender" bills in the past; however, Congress did not extend the package at the end of 2011.  The Joint Committee on Taxations says that the cost of a one-year extension of these 80 or so "tax extender" provisions is about $43 billion (although the estimate goes up significantly [to more than $80 billion annually] if they are extended for a 10 year period). Some of the provisions discussed that impact construction included accelerated depreciation of improvements to restaurants, increased expensing for capital investments and tax breaks designed to incentivize investments to reduce energy consumption or produce renewable energy. At the end of this year, Congress will need to decide what to do with this list of expiring provisions.  There is a lot of concern that all of the usual "tax extenders" will have to be reduced significantly in both number and cost in a tax reform package. Members of the House used this hearing as an opportunity to push their favored tax breaks in light of the difficult decisions that will have to be made during tax reform. For more information, please contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org.