Temporary Tax Extenders Coupled with Tax Hikes in House Ways & Means Bill

Yesterday, the House Ways & Means Committee marked up the misnamed Taxpayer Certainty and Disaster Tax Relief Act of 2019, which would extend portions of the tax code that expired in 2017 and 2018. Far from granting taxpayers certainty, the bill would only extend these temporary provisions until 2020, while increasing taxes on working families and making destructive policy changes to tax law.

The bill would undo the changes made to the estate, gift and generation skipping taxes in the Tax Cut and Jobs Act, doubling the number of family businesses and farms that would be subject to the death tax in 2023.

Moreover, the bill extends the practice of haphazardly reissuing portions of the tax code, which undermines certainty and prevents American employers and families from planning for their fiscal futures. NTU has long held that the practice of extending portions of the tax code periodically is not just bad practice, it is bad policy. This process of bundling unrelated tax provisions and using the cudgel of their expiration date to urge action allows for portions of the code that could otherwise not withstand singular scrutiny to be maintained.

The handful of “extenders” that may actually serve taxpayers’ long-term interests are held in limbo with each debate around extenders, creating unnecessary economic turmoil that thwarts any benefits they were designed to deliver. This is especially true of the House bill, which includes some meritorious provisions, such as an extension of tax relief granted to alcohol producers. Another item worth consideration includes an extension of the “look-through rule,” which could improve the transition to the new international tax provisions of TCJA by allowing related Controlled Foreign Corporations to deploy their assets more efficiently.  Furthermore, an item treating private mortgage insurance premiums like mortgage interest (which they effectively are for borrowers), can encourage the wider deployment of this beneficial tool, at the same time offloading credit risks from taxpayers’ backs.

But on the damaging side, the bill would insert policy changes that retroactively change the makeup of what qualifies for certain energy tax incentives - denying legitimate, existing claims for tax refunds based on a capricious date. This bill as a whole stands in stark contrast to the efforts made through tax reform to lower barriers for American businesses and create certainty for job creators to invest in the American workforce. Similarly, by increasing the death tax the bill would undermine the opportunity for American families to plan and grow their own businesses.

The Senate Finance Committee is completing its own work on tax extenders legislation, a process that should keep the American taxpayer at the center of its consideration as it moves forward.