Tax Extenders Deal a Mixed Bag for Taxpayers

The House is about to consider a $44.7 billion bill that would retroactively reinstate for one year dozens of expired tax relief provisions. While National Taxpayers Union is normally strongly supportive of tax relief, this particular package is a mixed bag unnecessarily loaded down with favor trading, economic distortions and complexity. The blame for this belongs primarily to Senate Majority Leader Harry Reid (D-NV).

Earlier in this Congress, the House passed several of the so-called “extenders” as stand-alone bills. With over 50 provisions expiring, this approach wisely allowed Representatives to independently consider each credit and deduction on its merits. The Senate chose to ignore these bills and instead wait until the last minute to deal with dozens of credits and deductions simultaneously. Now in the waning days of the year, taxpayers are being forced to swallow a number of dubious special-interest tax benefits in order to resuscitate important tax relief provisions that benefit millions of families and businesses.

Members of Congress face a vote for cronyism in the form of provisions like the wind production tax credit, if they want to pass meritorious tax items. That’s bad news for taxpayers, who are effectively caught in a hostage situation of Washington's own making.

But the good news is that this package will only apply through the end of 2014. Come January, the new Congress will have an opportunity to separate the wheat from the chaff. Lawmakers should get to work on this vital task right away next year if they hope to harvest a credible tax reform plan in the 114th Congress.