When business and consumers file their 2014 tax returns, they’ll be breathing a sigh a relief.
Sometime next week, the Senate is likely to approve a slate of some 55-tax breaks that expired at the end of last year, making them applicable to tax year 2014 as well. The provisions, known as “tax extenders” because they are technically not permanent, but still are extended on a regular basis, are a mixed bag of programs both loathed and loved by both Democrats and Republicans.
The one thing they all have in common, though, is that they aren’t paid for. As much as members of Congress bemoan the federal deficit and the national debt, when it comes to the billions of dollars in revenue lost to the tax extenders, they are happy to put it on the national credit card.
WHY THIS MATTERS
Everyone agrees that the national debt is a large and growing problem – interest payments alone will be a huge burden on future generations. But until Congress agrees to be honest about dealing with it, taxpayers can only expect to watch it grow.
Related: House Poised to Kick the Can Again on Tax Extenders
Joshua Smith, a senior policy analyst with the Economic Policy Institute ran the numbers on the extenders, including a recent push by the Senate to make some of the more business-friendly elements of the package permanent, and the cost of simply renewing the whole package on an annual basis for the next ten years. (Given the history of the extenders, the latter is a highly likely scenario.)
What he found is that the cost of the package, which includes a research and development credit for businesses as well as more arcane relaxed tax treatment of NASCAR facilities and racehorses, is far greater than a number of programs Congress has refused to fund out of professed worry about the deficit.
“If Congress were to extend all the breaks that expired in 2013 every year for the next decade, it would total $762 billion,” Smith writes. “These tax packages are then compared to the 10-year costs of three policies that Congress has failed to address, deeming them too expensive and unworthy of an increase in the deficit:
- A one-year extension of the federal Emergency Unemployment Compensation program
- A patch to fill in the Highway Trust Fund’s shortfall for the next decade
- A repeal of the remaining non-defense discretionary sequestration spending cuts.”
Related: Congress Gears Up to Fight Obama on Tax Breaks
The bottom line, according to Smith, is that the constant cries of concern about the deficit when addressing some spending but not others, is simply dishonest.
“It is hypocritical for Congress to cite deficit concerns when blocking legislation that would help low- and middle-income Americans, and then to disregard these deficit concerns when considering tax extenders overwhelmingly beneficial to big business,” Smith concludes.
Top Reads from The Fiscal Times
