Tax Provisions that Expired in 2014 ("Tax Extenders")
March 30, 2016
(R43898)
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Summary
Tax Provisions that Expired in 2014 (“Tax
Extenders”)
Molly F. Sherlock
Coordinator of Division Research and Specialist
September 4, 2015
Congressional Research Service
7-5700
www.crs.gov
R43898
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Summary
In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions.
Collectively, these temporary tax provisions are often referred to as
“"tax extenders.
”" Fifty-two
temporary tax provisions expired at the end of 2014.
All of these provisions were either temporarily or permanently extended as part of the Consolidated Appropriations Act, 2016 (P.L. 114-113), signed into law on December 18, 2015. Unlike previous tax extenders legislation, P.L. 114-113 made a number of provisions permanent, and provided longer-term extensions for other provisions. This report provides a broad overview of the tax extenders.
Congress had previously addressed tax extenders toward the end of the 113thThis report provides a broad overview of the
tax extenders.
Congress last acted on tax extenders towards the end of the 113th Congress. The Tax Increase
Prevention Act of 2014 (P.L. 113-295), signed into law on December 19, 2014, made tax
provisions that had expired at the end of 2013 available to taxpayers for the 2014 tax year. The
law extended most (but not all) provisions that had expired at the end of 2013. Most of the
provisions in P.L. 113-295
had been included in previous "tax extender" packages.
had been included in previous “tax extender” packages.
Tax extenders legislation has also been considered in the 114th Congress. The Senate Finance
Committee has reported legislation, the Tax Relief Extension Act of 2015 (S. 1946), that would
retroactively extend expired tax provisions, for two years, through 2016. All provisions in S. 1946
have been included in previous “tax extender” packages.
There are several reasons why Congress may choose to enact tax provisions on a temporary basis.
Enacting provisions on a temporary basis provides legislators with an opportunity to evaluate the
effectiveness of tax policies prior to expiration or extension. Temporary tax provisions may also
be used to provide temporary economic stimulus or disaster relief. Congress may also choose to
enact tax provisions on a temporary rather than permanent basis due to budgetary considerations,
as the foregone revenue from a temporary provision will generally be less than if it
was
permanent.
were permanent.
The provisions that expired at the end of 2014 are diverse in purpose, including provisions for
individuals, businesses, the charitable sector, and energy-related activities. Among the individual
provisions that expired are deductions for teachers
’' out-of-pocket expenses, state and local sales
taxes, qualified tuition and related expenses, and mortgage insurance premiums. On the business
side, under current law, the research and development (R&D) tax credit, the work opportunity tax
credit (WOTC), the active financing exceptions under Subpart F, the new markets tax credit, and
increased expensing and bonus depreciation allowances will not be available for taxpayers after
2014. Expired charitable provisions include the enhanced deduction for contributions of food
inventory and provisions allowing for tax-free distributions from retirement accounts for
charitable purposes. The renewable energy production tax credit (PTC) expired at the end of
2014, along with a number of other incentives for energy efficiency and renewable and alternative
fuels.
As discussed in this report, many of these provisions were made permanent in P.L. 114-113.
Additional information on specific extender provisions may be found in other CRS reports,
including the following:
CRS Report R43510, Selected Recently Expired Business Tax Provisions (
“Tax
Extenders”), by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock
"Tax Extenders"), by [author name scrubbed], [author name scrubbed], and [author name scrubbed];
CRS Report R43688, Selected Recently Expired Individual Tax Provisions (
“Tax
Extenders”"Tax Extenders"): In Brief
, by [author name scrubbed] and [author name scrubbed];
, by Jane G. Gravelle
CRS Report R43517, Recently Expired Charitable Tax Provisions (
“Tax
Extenders”"Tax Extenders"): In Brief
, by [author name scrubbed] and [author name scrubbed];
, by Jane G. Gravelle and Molly F. Sherlock
CRS Report R43541, Recently Expired Community Assistance-Related Tax
Provisions (
“"Tax Extenders
”"): In Brief
, by [author name scrubbed]; and
, by Sean Lowry
Congressional Research Service
Tax Provisions that Expired in 2014 (“Tax Extenders”)
CRS Report R43449, Recently Expired Housing Related Tax Provisions (
“Tax
Extenders”"Tax Extenders"): In Brief
, by [author name scrubbed].
Tax Provisions that Expired in 2014 ("Tax Extenders")
Introduction
There are dozens of temporary tax provisions in the Internal Revenue Code (IRC), many of which had expired at the end of 2014. Recent legislation has extended certain expiring provisions, and, in some cases, made temporary provisions permanent. The American , by Mark P. Keightley\
Congressional Research Service
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Contents
Introduction ..................................................................................................................................... 1
The Concept of “Tax Extenders” ..................................................................................................... 2
Evaluating Expiring Tax Provisions .......................................................................................... 2
Reasons for Temporary Tax Provisions .............................................................................. 3
Extenders as Tax Benefits ................................................................................................... 4
Tax Provisions that Expired in 2014................................................................................................ 5
Individual .................................................................................................................................. 6
Business .................................................................................................................................... 6
Charitable ................................................................................................................................ 13
Energy ..................................................................................................................................... 13
The Cost of Extending Expired and Expiring Tax Provisions ....................................................... 14
Cost of Temporary Extension .................................................................................................. 14
Cost of Permanent Extension .................................................................................................. 14
Recent “Tax Extenders” Legislation and Proposals ...................................................................... 17
114th Congress ......................................................................................................................... 17
The President’s FY2016 Budget Proposal ........................................................................ 17
113th Congress ......................................................................................................................... 18
Tax Provisions that Expired in 2013 that Were Not Extended by P.L. 113-295 ............... 21
Tables
Table 1. Tax Provisions that Expired at the End of 2014 ................................................................ 7
Table 2. The Cost of Extending Expired and Expiring Provisions ................................................ 16
Table 3. House Legislation to Permanently Extend Expired Tax Provisions ................................ 19
Contacts
Author Contact Information .......................................................................................................... 21
Acknowledgments ......................................................................................................................... 21
Congressional Research Service
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Introduction
There are dozens of temporary tax provisions in the Internal Revenue Code (IRC), many of which
expired at the end of 2014. Recent legislation extended certain expiring provisions. The American
Taxpayer Relief Act (ATRA; P.L. 112-240), signed into law on January 2, 2013, reduced tax
policy uncertainty by permanently extending most of the tax cuts first enacted in 2001 and 2003
and permanently indexing the alternative minimum tax (AMT) for inflation.
11 ATRA, however, did
not eliminate uncertainty in the tax code. Under ATRA, a number of provisions that had been
allowed to expire at the end of 2011 or 2012 were temporarily extended through 2013.
22 Most of
the provisions that expired at the end of 2013 were retroactively extended for one year, through
2014, in the Tax Increase Prevention Act of 2014 (P.L. 113-295
). The Consolidated Appropriations Act, 2016 (P.L. 114-113), signed into law on December 18, 2015, either made permanent or temporarily extended all tax provisions that had expired at the end of 2014.
).
Collectively, temporary tax provisions that are regularly extended by Congress rather than being
allowed to expire as scheduled are often referred to as
“"tax extenders.
”" Many of these
“tax
extender”"tax extender" provisions have been temporarily extended multiple times. The research tax credit, for
example,
has beenwas extended 16 times since being enacted in 1981
, before being modified and made permanent in P.L. 114-113. Most of the temporary tax
provisions that
had expired at the end of 2014 were previously extended more than once.
The Tax Increase Prevention Act of 2014, passed late in the 113th Congress, extended expiring tax
provisions for one year, retroactively through 2014. Other legislation considered in the 113th
Congress proposed a two-year extension—the Expiring Provisions Improvement Reform and
Efficiency (EXPIRE) Act (S. 2260). Legislation was also considered that would have made
certain expiring provisions permanent—see, for example, the Jobs for America Act (H.R. 4) and
the America Gives More Act of 2014 (H.R. 4719). Tax reform legislation introduced in the 113th
Congress, the Tax Reform Act of 2014 (H.R. 1), proposed to make permanent certain provisions
that are currently part of the tax extenders, including the research and experimentation (R&D) tax
credit and increased expensing allowances for certain businesses allowed under Internal Revenue
Code (IRC) Section 179.3 In the 114th Congress, the House has passed legislation that would
permanently extend certain expired provisions (America’s Small Business Tax Relief Act of 2015
(H.R. 636), State and Local Sales Tax Deduction Fairness Act of 2015 (H.R. 622), America Gives
More Act of 2015 (H.R. 644), and American Research and Competitiveness Act of 2015 (H.R.
880)).
The Tax Relief Extension Act of 2015 (S. 1946), as reported by the Senate Committee on
Finance, would extend the temporary provisions that expired at the end of 2014 for two years,
making the provisions available for the 2015 and 2016 tax year. S. 1946 would extend all
temporary tax provisions that expired at the end of 2014, as well as one provision that expired at
the end of 2013.
1
For additional background, see CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer
Relief Act of 2012, by Margot L. Crandall-Hollick.
2
Provisions that had been allowed to expire at the end of 2011 were extended retroactively. In addition to the “tax
extenders” discussed in this report, several provisions first enacted as part of the American Recovery and Reinvestment
Act (ARRA; P.L. 111-5) were temporarily extended in ATRA.
3
For background on expiring provisions that would be made permanent in the Tax Reform Act of 2014, see U.S.
Congress, Joint Committee on Taxation, Description of Expiring Business-Related Tax Provisions Made Permanent or
Extended under the “Tax Reform Act of 2014,” a Discussion Draft of the Chairman of the House Committee on Ways
and Means to Reform the Internal Revenue Code, committee print, 113th Cong., April 4, 2014, JCX-35-14, available at
https://www.jct.gov/publications.html?func=startdown&id=4581.
Congressional Research Service
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
The President’s FY2016 budget also proposes to permanently extend or modify certain expired
provisions and temporarily extend others.4 The President’s budget assumes that the American
opportunity tax credit (AOTC), the earned income tax credit (EITC) expansions, and the child tax
credit (CTC) expansions, which were extended through 2017 as part of ATRA, are made
permanent.
This report provides a broad overview of the tax extenders. Additional information on specific
extender provisions may be found in other CRS reports, including the following:
CRS Report R43510, Selected Recently Expired Business Tax Provisions (“Tax
Extenders”), by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock
CRS Report R43688, Selected Recently Expired Individual Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle
CRS Report R43517, Recently Expired Charitable Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle and Molly F. Sherlock
CRS Report R43541, Recently Expired Community Assistance-Related Tax
Provisions (“Tax Extenders”): In Brief, by Sean Lowry
CRS Report R43449, Recently Expired Housing Related Tax Provisions (“Tax
Extenders”): In Brief, by Mark P. Keightley
The Concept of “Tax Extenders”
The tax code presently contains dozens of temporary tax provisions. In the past, legislation to
extend some set of these expiring provisions has been referred to by some as the “tax extender”
package. While there is no formal definition of a “tax extender,” the term has regularly been used
to refer to the package of expiring tax provisions temporarily extended by Congress. Oftentimes,
these expiring provisions are temporarily extended for a short period of time (e.g., one or two
years). Over time, as new temporary provisions have been routinely extended and hence added to
this package, the number of provisions that might be considered “tax extenders” has grown.5
Evaluating Expiring Tax Provisions
There are various reasons Congress may choose to enact temporary (as opposed to permanent) tax
provisions. Enacting provisions on a temporary basis, in theory, would provide Congress with an
opportunity to evaluate the effectiveness of specific provisions before providing further
extension. Temporary tax provisions may also be used to provide relief during times of economic
weakness or following a natural disaster. Congress may also choose to enact temporary provisions
for budgetary reasons. Examining the reason why a certain provision is temporary rather than
permanent may be part of evaluating whether a provision should be extended.
4
For a complete description of the tax-related proposals in the President’s FY2016 budget, see Department of the
Treasury, General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals, February 2015,
http://www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.
5
For a history of the tax extenders, see U.S. Congress, Senate Committee on Rules and Administration, The Tax
Extenders: How Congressional Rules and Outside Interests Shape Policy, committee print, prepared by Congressional
Research Service, 113th Cong., 2nd sess., December 2014, S. Prt. 113-30, pp. 441-456, available at http://www.gpo.gov/
fdsys/pkg/CPRT-113SPRT89394/pdf/CPRT-113SPRT89394.pdf#page=453.
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
Reasons for Temporary Tax Provisions
There are several reasons why Congress may choose to enact tax provisions on a temporary basis.
Enacting provisions on a temporary basis may provide an opportunity to evaluate effectiveness
before expiration or extension. However, this rationale for enacting temporary tax provisions is
undermined if expiring provisions are regularly extended without systematic review, as is the case
in practice. In 2012 testimony before the Senate Committee on Finance, Dr. Rosanne Altshuler
noted that
an expiration date can be seen as a mechanism to force policymakers to consider the costs
and benefits of the special tax treatment and possible changes to increase the
effectiveness of the policy. This reasoning is compelling in theory, but has been an
absolute failure in practice as no real systematic review ever occurs. Instead of subjecting
each provision to careful analysis of whether its benefits outweigh its costs, the extenders
are traditionally considered and passed in their entirety as a package of unrelated
temporary tax benefits.6
While most expiring tax provisions have been extended in recent years, there have been some
exceptions. For example, tax incentives for alcohol fuels (e.g., ethanol), which can be traced back
to policies first enacted in 1978, were not extended beyond 2011. The Government Accountability
Office (GAO) had previously found that with the renewable fuel standard (RFS) mandate, tax
credits for ethanol were duplicative and did not increase consumption.7 Congress may choose not
to extend certain provisions if an evaluation determines that the benefits provided by the
provision do not exceed the cost (in terms of foregone tax revenue).
Tax policy may also be used to address temporary circumstances in the form of economic
stimulus or disaster relief. Economic stimulus measures might include bonus depreciation or
generous expensing allowances.8 Disaster relief policies might include enhanced casualty loss
deductions or additional net operating loss carrybacks.9 Other recent examples of temporary
provisions that have been enacted to address special economic circumstances include the
exclusion of mortgage forgiveness from taxable income during the recent housing crisis,10 the
payroll tax cut,11 and the grants in lieu of tax credits to compensate for weak tax-equity markets
during the economic downturn (the Section 1603 grants).12 It has been argued that provisions that
6
U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony
of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?
id=b1604e2e-5056-a032-52ff-dd661f9280f6.
7
See U.S. Government Accountability Office, Biofuels: Potential Effects and Challenges of Required Increases in
Production and Use, GAO-09-44, August 2009, http://www.gao.gov/new.items/d09446.pdf and U.S. Government
Accountability Office, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and
Enhance Revenue, GAO-11-318SP, March 2011, http://www.gao.gov/assets/320/315920.pdf.
8
For a discussion of bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation:
Economic and Budgetary Issues, by Jane G. Gravelle. For background on these policies, see CRS Report RL31852, The
Section 179 and Bonus Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress, by Gary
Guenther.
9
For more information, see CRS Report R42839, Tax Provisions to Assist with Disaster Recovery, by Erika K. Lunder,
Carol A. Pettit, and Jennifer Teefy.
10
For more information, see CRS Report RL34212, Analysis of the Tax Exclusion for Canceled Mortgage Debt
Income, by Mark P. Keightley and Erika K. Lunder.
11
For more information, see CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief
Description and Economic Analysis, by Donald J. Marples and Molly F. Sherlock.
12
For more information, see CRS Report R41635, ARRA Section 1603 Grants in Lieu of Tax Credits for Renewable
Energy: Overview, Analysis, and Policy Options, by Phillip Brown and Molly F. Sherlock.
Congressional Research Service
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
were enacted to address a temporary situation should be allowed to expire once the situation is
resolved.13
Congress may also choose to enact tax policies on a temporary basis for budgetary reasons. If
policymakers decide that legislation that reduces revenues must be paid for, it is easier to find
resources to offset short-term extensions rather than long-term or permanent extensions.14
Additionally, by definition the Congressional Budget Office (CBO) assumes under the current
law baseline that temporary tax cuts expire as scheduled. Thus, the current law baseline does not
assume that temporary tax provisions are regularly extended. Hence, if temporary expiring tax
provisions are routinely extended in practice, the CBO current law baseline would tend to
overstate projected revenues, making the long-term revenue outlook stronger. In other words, by
making tax provisions temporary rather than permanent, these provisions have a smaller effect on
the long-term fiscal outlook.15
Extenders as Tax Benefits16
Temporary tax benefits are a form of federal subsidy that treats eligible activities favorably
compared to others, and channels economic resources into qualified uses. Extenders influence
how economic actors behave and how the economy’s resources are employed. Like all tax
benefits, extenders can be evaluated by looking at the impact on economic efficiency, equity, and
simplicity.17 Temporary tax provisions may be efficient and effective in accomplishing their
intended purpose, though not equitable. Alternatively, an extender may be equitable but not
efficient. Policymakers may have to choose the economic objectives that matter most.
Economic Efficiency
Extenders often provide subsidies to encourage more of an activity than would otherwise be
undertaken. According to economic theory, in most cases an economy best satisfies the wants and
needs of its participants if markets allocate resources free of distortions from taxes and other
factors. Market failures, however, may occur in some instances, and economic efficiency may
actually be improved by tax distortions.18 Thus, the ability of extenders to improve economic
13
This point was made in U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking LongTerm Solutions, Testimony of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at
http://www.finance.senate.gov/hearings/hearing/?id=b1604e2e-5056-a032-52ff-dd661f9280f6 and U.S. Congress,
House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating
Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
14
U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for
Evaluating Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
15
U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony
of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?
id=b1604e2e-5056-a032-52ff-dd661f9280f6.
16
This section is adapted from archived CRS Report RL32367, Certain Temporary Tax Provisions that Expired in
December 2009 (“Extenders”), by James M. Bickley.
17
Using these “criteria for good tax policy” to evaluate tax extenders was discussed in U.S. Congress, House
Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating Certain
Expiring Tax Provisions, Testimony of Dr. Jim White, 112th Cong., June 8, 2012, available at
http://waysandmeans.house.gov/uploadedfiles/white.pdf.
18
Market failure occurs when the marginal benefit of an action does not equal the marginal cost. For example,
polluting forms of energy production cause social costs that are not taken into account by the producer; hence, there is
an argument for taxing this type of energy or, alternatively, subsidizing less-polluting firms.
Congressional Research Service
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
welfare depends in part on whether or not the extender is remedying a market failure. According
to theory, a tax extender reduces economic efficiency if it is not addressing a specific market
failure.
An extender is also considered relatively effective if it stimulates the desired activity better than a
direct subsidy. Direct spending programs, however, can often be more successful at targeting
resources than indirect subsidies made through the tax system such as tax extenders.19
Equity
A tax is considered to be fair when it contributes to a socially desirable distribution of the tax
burden. Tax benefits such as the extenders can result in individuals with similar incomes and
expenses paying differing amounts of tax, depending on whether they engage in tax-subsidized
activities. This differential treatment is a deviation from the standard of horizontal equity, which
requires that people in equal positions should be treated equally.
Another component of fairness in taxation is vertical equity, which requires that tax burdens be
distributed fairly among people with different abilities to pay. Most extenders are considered
inequitable because they benefit those who have a greater ability to pay taxes. Those individuals
with relatively less income and thus a reduced ability to pay taxes may not have the same
opportunity to benefit from extenders as those with higher income. The disproportionate benefit
of tax expenditures to individuals with higher incomes reduces the progressivity of the tax
system, which is often viewed as a reduction in equity.
An example of the effect a tax benefit can have on vertical equity is illustrated by two teachers
who have both incurred $250 in classroom-related expenses and are eligible to claim the abovethe-line deduction for expenses. Yet the tax benefit to the two differs if they are in different tax
brackets. A teacher with lower income, who may be in the 15% income tax bracket, receives a
deduction with a value of $37.50, while another teacher, in the 33% bracket, receives a deduction
value of $82.50. Thus, the higher-income taxpayer, with presumably greater ability to pay taxes,
receives a greater benefit than the lower-income taxpayer.
Simplicity
Extenders contribute to the complexity of the tax code and raise the cost of administering the tax
system. Those costs, which can be difficult to isolate and measure, are rarely included in the costbenefit analysis of temporary tax provisions. In addition to making the tax code more difficult for
the government to administer, complexity also increases costs imposed on individual taxpayers.
With complex incentives, individuals devote more time to tax preparation and are more likely to
hire paid preparers.
Tax Provisions that Expired in 2014
Dozens of temporary tax provisions expired at the end of 2014 (see Table 1). Most of these
provisions have been extended as part of previous “tax extender” legislation. For the purposes of
this report, expiring provisions have been classified as belonging to one of four categories:
individual, business, charitable, or energy. The following sections provide additional details on
expiring provisions within each category. Table 1 also notes which provisions are included as part
19
Stanley S. Surrey, “Tax Incentives as a Device for Implementing Government Policy: A Comparison with Direct
Government Expenditures,” Harvard Law Review, vol. 83, no. 4 (February 1970), pp. 705-738.
Congressional Research Service
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Tax Provisions that Expired in 2014 (“Tax Extenders”)
of the Tax Relief Extension Act of 2015 (S. 1946), and the estimated 10-year revenue cost of a
two-year extension.
Individual20
All six of the individual tax extender provisions that expired at the end of 2014 have previously
been extended as part of tax extenders legislation. The longest-standing individual extender
provision is the above-the-line deduction for classroom expenses incurred by school teachers.
This provision was first enacted on a temporary basis in 2002 and has regularly been included in
tax extender packages. Other individual provisions that have been extended more than once
include the deduction for state and local sales taxes,21 the above-the-line deduction for tuition and
related expenses,22 the deduction for mortgage insurance premiums,23 and the parity for the
exclusion of employer-provided mass transit and parking benefits.
Business24
All of the business provisions that expired at the end of 2014 have been extended at least once,
most more than once. Long-standing provisions that are scheduled for expiration include the
research tax credit,25 the rum excise tax cover-over,26 the Work Opportunity Tax Credit,27 the
Qualified Zone Academy Bond (QZAB) allocation limitation,28 and the active financing
exception under Subpart F.29 The New Markets Tax Credit, first enacted in 2000 to promote
investment in low-income communities, also expired at the end of 2014.30 Bonus depreciation and
enhanced expensing allowances, which are often viewed as economic stimulus measures, also
expired at the end of 2014.31
20
For more information, see CRS Report R43688, Selected Recently Expired Individual Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle.
21
For more information, see CRS Report RL32781, Federal Deductibility of State and Local Taxes, by Steven Maguire
and Jeffrey M. Stupak.
22
For more information, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary
Effects, by Margot L. Crandall-Hollick.
23
For general background on expired housing-related provisions, see CRS Report R43449, Recently Expired Housing
Related Tax Provisions (“Tax Extenders”): In Brief, by Mark P. Keightley.
24
For more information, see CRS Report R43510, Selected Recently Expired Business Tax Provisions (“Tax
Extenders”), by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock.
25
For more information, see CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th
Congress, by Gary Guenther.
26
For more information, see CRS Report R41028, The Rum Excise Tax Cover-Over: Legislative History and Current
Issues, by Steven Maguire.
27
For more information, see CRS Report R43729, The Work Opportunity Tax Credit, by Benjamin Collins and Sarah
A. Donovan.
28
For more information, see CRS Report R40523, Tax Credit Bonds: Overview and Analysis, by Steven Maguire.
29
For more information, see CRS Report R41852, U.S. International Corporate Taxation: Basic Concepts and Policy
Issues, by Mark P. Keightley and Jeffrey M. Stupak.
30
For more information, see CRS Report RL34402, New Markets Tax Credit: An Introduction, by Donald J. Marples
and Sean Lowry and CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions (“Tax
Extenders”): In Brief, by Sean Lowry.
31
For more information, see CRS Report RL31852, The Section 179 and Bonus Depreciation Expensing Allowances:
Current Law and Issues for the 114th Congress, by Gary Guenther. For more on bonus depreciation in the context of
tax extenders, see CRS Report R43432, Bonus Depreciation: Economic and Budgetary Issues, by Jane G. Gravelle.
Congressional Research Service
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Table 1. Tax Provisions that Expired at the End of 2014
(extensions in previous “tax extenders” legislation)
S. 1946
Extending Legislation
10-Year
Cost
Estimate P.L. 113Extended? (billions) 295
P.L. 112240
P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106312
343
432
311
147
170
Individual Provisions
Above-the-Line Deduction of up to $250 for Teacher
Classroom Expenses
Yy
$0.46
X
X
X
X
X
Deduction for State and Local General Sales Taxes
Y
$6.70
X
X
X
X
X
Above-the-Line Deduction for Qualified Tuition and Related
Expenses
Y
$0.61
X
X
X
X
X
Mortgage Insurance Premiums Treated as Qualified
Residence Interest
Y
$2.32
X
X
X
a
Parity for Exclusion for Employer-Provided Mass Transit and
Parking Benefits
Yy
$0.19
X
X
X
Exclusion of Discharge of Principal Residence Indebtedness
from Gross Income for Individuals
Yy
$5.17
X
X
Tax Credit for Research and Experimentation Expenses
Yy
$22.62
X
X
X
X
X
X
c
X
Temporary Increase in Limit on Cover Over of Rum Excise
Tax Revenues to Puerto Rico and the Virgin Islands
Y
$0.34
X
X
X
X
X
X
X
X
Work Opportunity Tax Credit
Yy
$3.15
X
Xd
X
e
X
X
X
X
Qualified Zone Academy Bonds - Allocation of Bond
Limitation
Yy
$0.26
X
X
X
X
X
X
X
X
Exceptions under Subpart F for Active Financing Income
Y
$13.45
X
X
X
X
f
f
X
X
Indian Employment Tax Credit
Y
$0.13
X
X
X
X
X
X
X
X
Xb
Business Provisions
CRS-7
S. 1946
Extending Legislation
10-Year
Cost
Estimate P.L. 113Extended? (billions) 295
P.L. 112240
P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106312
343
432
311
147
170
Accelerated Depreciation for Business Property on Indian
Reservations
Yy
$0.15
X
X
X
X
X
New Markets Tax Credit
Yy
$2.08
X
X
X
X
X
American Samoa Economic Development Credit
Y
$0.03
X
X
X
X
X
Look-Through Treatment of Payments Between Related
Controlled Foreign Corporations under the Foreign Personal
Holding Company Rules
Y
$2.72
X
X
X
X
Credit for Railroad Track Maintenance
Yy
$0.43
X
X
X
X
15-Year Straight-Line Cost Recovery for Qualified Leasehold,
Restaurant, and Retail Improvements
Y
$4.93
X
X
X
X
7-Year Recovery for Motorsport Racing Facilities
Y
$0.10
X
X
X
X
Deduction Allowable with Respect to Income Attributable to
Domestic Production Activities in Puerto Rico
Y
$0.23
X
X
X
X
Modification of Tax Treatment of Certain Payments under
Existing Arrangements to Controlling Exempt Organizations
Y
$0.03
X
X
X
X
Treatment of Certain Dividends of Regulated Investment
Companies (“RICs”)
Y
$0.21
X
X
X
X
RIC Qualified Investment Entity Treatment under FIRPTA
Y
$0.10
X
X
X
X
Mine Rescue Team Training Credit
Y
-i-
X
X
X
X
Election to Expense Mine-Safety Equipment
Y
—
X
X
X
X
Employer Wage Credit for Activated Military Reservists
Yy
$0.26
X
X
X
Special Expensing Rules for Film and Television Production
Yy
$0.03
X
X
X
Exclusion of 100% Gain on Certain Small Business Stock
Y
$3.17
X
X
X
CRS-8
X
X
S. 1946
Extending Legislation
10-Year
Cost
Estimate P.L. 113Extended? (billions) 295
P.L. 112240
P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106312
343
432
311
147
170
Increase in Expensing to $500,000 / $2,000,000 and
Expansion of Definition of Section 179 Property
Yy
$3.48
X
X
g
Empowerment Zone Tax Incentivesh
Yy
$0.65
X
X
X
Bonus Depreciationi
Y
$3.04
X
X
X
i
Reduction in S Corporation Recognition Period for Built-In
Gains Tax
Y
$0.42
X
X
Election to Accelerate AMT Credits in Lieu of Additional
First-Year Depreciation
Y
$0.53
X
X
Low-Income Housing Tax Credit (LIHTC) Rate
Y
$0.01
X
Xj
Treatment of Military Basic Housing Allowances under LowIncome Housing Creditk
Y
$0.04
X
X
Three-Year Depreciation for Race Horses Two Years or
Youngerl
Y
$0.01
X
Enhanced Charitable Deduction for Contributions of Food
Inventory
Y
$0.26
X
X
X
X
Tax-Free Distributions From Individual Retirement Accounts
for Charitable Purposes
Y
$1.86
X
X
X
X
Basis Adjustment to Stock of S Corporations Making
Charitable Contributions of Property
Y
$0.10
X
X
X
X
Special Rules for Contributions of Capital Gain Real Property
for Conservation Purposes
Y
$0.28
X
X
X
n
i
Charitable Provisions
CRS-9
m
i
S. 1946
Extending Legislation
10-Year
Cost
Estimate P.L. 113Extended? (billions) 295
P.L. 112240
P.L. 111- P.L. 110- P.L. 109- P.L. 108- P.L. 107- P.L. 106312
343
432
311
147
170
Energy Provisions
Construction Date for Eligible Facilities (Including Wind) to
Claim the Production Tax Credit (PTC) or the Investment
Tax Credit (ITC) in Lieu of the PTCo
Y
Special Rule to Implement Electric Transmission
Restructuring
Y
Credit for Construction of Energy Efficient New Homes
$10.49
X
X
p
q
p
—
X
X
X
X
r
Y
$0.76
X
X
X
X
X
Energy Efficient Commercial Building Deduction
Yy
$0.32
X
Xs
X
Credit for Section 25C Nonbusiness Energy Property
Yy
$1.39
X
X
Xt
X
Alternative Fuel Vehicle Refueling Property
Y
$0.11
X
X
X
X
Incentives for Alternative Fuel and Alternative Fuel Mixtures
Y
$0.92
X
X
X
X
Incentives for Biodiesel and Renewable Dieselu
Yy
$2.47
X
X
X
X
Second Generation (Cellulosic) Biofuel Producer Credit
Y
$0.05
X
X
Credit for Production of Indian Coal
Y
$0.08
X
X
Special Depreciation Allowance for Second Generation
(Cellulosic) Biofuel Plant Propertyv
Y
-i-
X
X
Alternative motor vehicle credit for qualified fuel cell
vehiclesw
Y
$0.01
*
Credit for two-wheeled plug-in electric vehiclesx
Y
-i-
q
q
X
Source: CRS analysis of extending legislation; Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2014-2025, January 9, 2015, JCX-1-15; and U.S.
Congress, Joint Committee on Taxation, A Report to the Congressional Budget Office of the Macroeconomic Effects of the “Tax Relief Extension Act of 2015,” as Ordered to be
Reported by the Senate Committee on Finance, committee print, 114th Cong., August 4, 2015, JCX-107-15.
Notes: A “*”
In the 114th Congress, much of the debate on tax extenders focused on whether expired tax provisions should be made permanent, or temporarily extended. In P.L. 114-113, all expired tax provisions were extended, either temporarily or by being made permanent. Making a number of expired provisions permanent reduced uncertainty in the tax code, by reducing the number of temporary provisions scheduled to expire. However, as not all expired provisions were made permanent, there are still a number of tax extenders set to expire at the end of 2016. Debate in the second half of the 114th Congress may address whether the provisions set to expire at the end of 2016 should be extended.
This report provides a broad overview of the tax extenders. Additional information on specific extender provisions may be found in other CRS reports, including the following:
- CRS Report R43510, Selected Recently Expired Business Tax Provisions ("Tax Extenders"), by [author name scrubbed], [author name scrubbed], and [author name scrubbed];
- CRS Report R43688, Selected Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] and [author name scrubbed];
- CRS Report R43517, Recently Expired Charitable Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] and [author name scrubbed];
- CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed]; and
- CRS Report R43449, Recently Expired Housing Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed].
Recent Legislative Action
The Consolidated Omnibus Appropriations Act, 2016 (P.L. 114-113) contained, as Division Q, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act either temporarily extended or made permanent all tax provisions that had expired at the end of 2014. Further, the PATH Act also made permanent the enhanced child tax credit, the enhanced American Opportunity Tax Credit, and the enhanced earned income tax credit, which were scheduled to expire in 2017. The PATH Act also included a two-year moratorium on the medical device excise tax.3 Division P of P.L. 114-113 also contained tax-related provisions, including changes to and a two-year moratorium on the high-cost employer-sponsored health coverage excise tax,4 a one-year moratorium on the annual fee on health insurance providers, extensions of tax credits for wind renewable power facilities and solar energy, and changes to the Section 199 deduction for independent oil refineries.5
The Tax Increase Prevention Act of 2014, passed late in the 113th Congress, extended expiring tax provisions for one year, retroactively through 2014. Other legislation considered in the 113th Congress proposed a two-year extension—the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act (S. 2260). Legislation was also considered that would have made certain expiring provisions permanent—see, for example, the Jobs for America Act (H.R. 4) and the America Gives More Act of 2014 (H.R. 4719). Tax reform legislation introduced in the 113th Congress, the Tax Reform Act of 2014 (H.R. 1), proposed to make permanent certain provisions that are currently part of the tax extenders, including the research and experimentation (R&D) tax credit and increased expensing allowances for certain businesses allowed under Internal Revenue Code (IRC) Section 179.6 In the 114th Congress, the House had passed legislation that would permanently extend certain expired provisions (America's Small Business Tax Relief Act of 2015 [H.R. 636], State and Local Sales Tax Deduction Fairness Act of 2015 [H.R. 622], America Gives More Act of 2015 [H.R. 644], and American Research and Competitiveness Act of 2015 [H.R. 880]).
The Tax Relief Extension Act of 2015 (S. 1946), as reported by the Senate Committee on Finance, would have extended the temporary provisions that expired at the end of 2014 for two years, making the provisions available for the 2015 and 2016 tax year. S. 1946 would have extended all temporary tax provisions that expired at the end of 2014, as well as one provision that expired at the end of 2013.
The Concept of "Tax Extenders"
The tax code presently contains dozens of temporary tax provisions. In the past, legislation to extend some set of these expiring provisions has been referred to by some as the "tax extender" package. While there is no formal definition of a "tax extender," the term has regularly been used to refer to the package of expiring tax provisions temporarily extended by Congress. Oftentimes, these expiring provisions are temporarily extended for a short period of time (e.g., one or two years). Over time, as new temporary provisions have been routinely extended and hence added to this package, the number of provisions that might be considered "tax extenders" has grown.7
Evaluating Expiring Tax Provisions
There are various reasons Congress may choose to enact temporary (as opposed to permanent) tax provisions. Enacting provisions on a temporary basis, in theory, would provide Congress with an opportunity to evaluate the effectiveness of specific provisions before providing further extension. Temporary tax provisions may also be used to provide relief during times of economic weakness or following a natural disaster. Congress may also choose to enact temporary provisions for budgetary reasons. Examining the reason why a certain provision is temporary rather than permanent may be part of evaluating whether a provision should be extended.
Reasons for Temporary Tax Provisions
There are several reasons why Congress may choose to enact tax provisions on a temporary basis. Enacting provisions on a temporary basis may provide an opportunity to evaluate effectiveness before expiration or extension. However, this rationale for enacting temporary tax provisions is undermined if expiring provisions are regularly extended without systematic review, as is the case in practice. In 2012 testimony before the Senate Committee on Finance, Dr. Rosanne Altshuler noted that
an expiration date can be seen as a mechanism to force policymakers to consider the costs and benefits of the special tax treatment and possible changes to increase the effectiveness of the policy. This reasoning is compelling in theory, but has been an absolute failure in practice as no real systematic review ever occurs. Instead of subjecting each provision to careful analysis of whether its benefits outweigh its costs, the extenders are traditionally considered and passed in their entirety as a package of unrelated temporary tax benefits.8
While most expiring tax provisions have been extended in recent years, there have been some exceptions. For example, tax incentives for alcohol fuels (e.g., ethanol), which can be traced back to policies first enacted in 1978, were not extended beyond 2011. The Government Accountability Office (GAO) had previously found that with the renewable fuel standard (RFS) mandate, tax credits for ethanol were duplicative and did not increase consumption.9 Congress may choose not to extend certain provisions if an evaluation determines that the benefits provided by the provision do not exceed the cost (in terms of foregone tax revenue).
Tax policy may also be used to address temporary circumstances in the form of economic stimulus or disaster relief. Economic stimulus measures might include bonus depreciation or generous expensing allowances.10 Disaster relief policies might include enhanced casualty loss deductions or additional net operating loss carrybacks.11 Other recent examples of temporary provisions that have been enacted to address special economic circumstances include the exclusion of mortgage forgiveness from taxable income during the recent housing crisis,12 the payroll tax cut,13 and the grants in lieu of tax credits to compensate for weak tax-equity markets during the economic downturn (the Section 1603 grants).14 It has been argued that provisions that were enacted to address a temporary situation should be allowed to expire once the situation is resolved.15
Congress may also choose to enact tax policies on a temporary basis for budgetary reasons. If policymakers decide that legislation that reduces revenues must be paid for, it is easier to find resources to offset short-term extensions rather than long-term or permanent extensions.16 Additionally, by definition the Congressional Budget Office (CBO) assumes under the current law baseline that temporary tax cuts expire as scheduled. Thus, the current law baseline does not assume that temporary tax provisions are regularly extended. Hence, if temporary expiring tax provisions are routinely extended in practice, the CBO current law baseline would tend to overstate projected revenues, making the long-term revenue outlook stronger. In other words, by making tax provisions temporary rather than permanent, these provisions have a smaller effect on the long-term fiscal outlook.17
Extenders as Tax Benefits18
Temporary tax benefits are a form of federal subsidy that treats eligible activities favorably compared to others, and channels economic resources into qualified uses. Extenders influence how economic actors behave and how the economy's resources are employed. Like all tax benefits, extenders can be evaluated by looking at the impact on economic efficiency, equity, and simplicity.19 Temporary tax provisions may be efficient and effective in accomplishing their intended purpose, though not equitable. Alternatively, an extender may be equitable but not efficient. Policymakers may have to choose the economic objectives that matter most.
Economic Efficiency
Extenders often provide subsidies to encourage more of an activity than would otherwise be undertaken. According to economic theory, in most cases an economy best satisfies the wants and needs of its participants if markets allocate resources free of distortions from taxes and other factors. Market failures, however, may occur in some instances, and economic efficiency may actually be improved by tax distortions.20 Thus, the ability of extenders to improve economic welfare depends in part on whether or not the extender is remedying a market failure. According to theory, a tax extender reduces economic efficiency if it is not addressing a specific market failure.
An extender is also considered relatively effective if it stimulates the desired activity better than a direct subsidy. Direct spending programs, however, can often be more successful at targeting resources than indirect subsidies made through the tax system such as tax extenders.21
Equity
A tax is considered to be fair when it contributes to a socially desirable distribution of the tax burden. Tax benefits such as the extenders can result in individuals with similar incomes and expenses paying differing amounts of tax, depending on whether they engage in tax-subsidized activities. This differential treatment is a deviation from the standard of horizontal equity, which requires that people in equal positions should be treated equally.
Another component of fairness in taxation is vertical equity, which requires that tax burdens be distributed fairly among people with different abilities to pay. Most extenders are considered inequitable because they benefit those who have a greater ability to pay taxes. Those individuals with relatively less income and thus a reduced ability to pay taxes may not have the same opportunity to benefit from extenders as those with higher income. The disproportionate benefit of tax expenditures to individuals with higher incomes reduces the progressivity of the tax system, which is often viewed as a reduction in equity.
An example of the effect a tax benefit can have on vertical equity is illustrated by two teachers who have both incurred $250 in classroom-related expenses and are eligible to claim the above-the-line deduction for expenses. Yet the tax benefit to the two differs if they are in different tax brackets. A teacher with lower income, who may be in the 15% income tax bracket, receives a deduction with a value of $37.50, while another teacher, in the 33% bracket, receives a deduction value of $82.50. Thus, the higher-income taxpayer, with presumably greater ability to pay taxes, receives a greater benefit than the lower-income taxpayer.
Simplicity
Extenders contribute to the complexity of the tax code and raise the cost of administering the tax system. Those costs, which can be difficult to isolate and measure, are rarely included in the cost-benefit analysis of temporary tax provisions. In addition to making the tax code more difficult for the government to administer, complexity also increases costs imposed on individual taxpayers. With complex incentives, individuals devote more time to tax preparation and are more likely to hire paid preparers.
Tax Provisions that Expired in 2014
Dozens of temporary tax provisions had expired at the end of 2014, all of which were extended in P.L. 114-113 (see Table 1). Most of these provisions have been extended as part of previous "tax extender" legislation. For the purposes of this report, provisions that expired in 2014 have been classified as belonging to one of four categories: individual, business, charitable, or energy. The following sections provide additional details. Table 1 also includes information on the cost of the extension in P.L. 114-113, as enacted.
Individual22
All six of the individual tax extender provisions that expired at the end of 2014 had previously been extended as part of tax extenders legislation. The longest-standing individual extender provision is the above-the-line deduction for classroom expenses incurred by school teachers. This provision was first enacted on a temporary basis in 2002 and has regularly been included in tax extender packages. The above-the-line deduction for classroom expenses was made permanent in P.L. 114-113. Other individual provisions that have been extended more than once include the deduction for state and local sales taxes,23 the above-the-line deduction for tuition and related expenses,24 the deduction for mortgage insurance premiums,25 and the parity for the exclusion of employer-provided mass transit and parking benefits. The deduction for state and local sales taxes and the provision providing parity for the exclusion of employer-provided mass transit and parking benefits were also made permanent in P.L. 114-113.
Business26
All of the business provisions that expired at the end of 2014 had previously been extended at least once, most more than once. Long-standing provisions that expired at the end of 2014 include the research tax credit,27 the rum excise tax cover-over,28 the Work Opportunity Tax Credit,29 the Qualified Zone Academy Bond (QZAB) allocation limitation,30 and the active financing exception under Subpart F.31 The New Markets Tax Credit, first enacted in 2000 to promote investment in low-income communities, also expired at the end of 2014.32 Bonus depreciation and enhanced expensing allowances, which are often viewed as economic stimulus measures, also expired at the end of 2014.33
A number of business-related extender provisions were made permanent in P.L. 114-113, including the research tax credit, enhanced expensing under Section 179, and the active financing exception under Subpart F. Other provisions, including the New Markets Tax Credit and bonus depreciation, were given longer-term extensions, through 2019. Table 1 provides additional information on which business tax extenders were made permanent, extended through 2019, or extended through 2016.
Table 1. Tax Provisions that Expired at the End of 2014
(extensions in previous "tax extenders" legislation)
P.L. 114-113
|
Extending Legislation
|
Extended?
|
10-Year Cost Estimate (billions)
|
P.L. 113-295
|
P.L. 112-240
|
P.L. 111-312
|
P.L. 110-343
|
P.L. 109-432
|
P.L. 108-311
|
P.L. 107-147
|
P.L. 106-170
|
Individual Provisions
|
Above-the-Line Deduction of up to $250 for Teacher Classroom Expenses
|
Permanenta
$2.9
|
X
|
X
|
X
|
X
|
X
|
X
|
Deduction for State and Local General Sales Taxes
|
Permanent
|
$42.4
|
X
|
X
|
X
|
X
|
X
|
Above-the-Line Deduction for Qualified Tuition and Related Expenses
|
2016
|
$0.6
|
X
|
X
|
X
|
X
|
X
|
Mortgage Insurance Premiums Treated as Qualified Residence Interest
|
2016
|
$2.3
|
X
|
X
|
X
|
b
Parity for Exclusion for Employer-Provided Mass Transit and Parking Benefits
|
Permanent
|
$1.8
|
X
|
X
|
X
|
Exclusion of Discharge of Principal Residence Indebtedness from Gross Income for Individuals
|
2016c
$5.1
|
X
|
X
|
Xc
Business Provisions
|
Tax Credit for Research and Experimentation Expenses
|
Permanenta
$113.2
|
X
|
X
|
X
|
X
|
X
|
X
|
d
X
|
Temporary Increase in Limit on Cover Over of Rum Excise Tax Revenues to Puerto Rico and the Virgin Islands
|
2016
|
$0.3
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
Work Opportunity Tax Credit
|
2019a
$9.0
|
X
|
Xe
X
|
f
X
|
X
|
X
|
X
|
Qualified Zone Academy Bonds - Allocation of Bond Limitation
|
2016
|
$0.2
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
Exceptions under Subpart F for Active Financing Income
|
Permanent
|
$78.0
|
X
|
X
|
X
|
X
|
g
g
X
|
X
|
Indian Employment Tax Credit
|
2016
|
$0.1
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
Accelerated Depreciation for Business Property on Indian Reservations
|
2016a
$0.2
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
New Markets Tax Credit
|
2019
|
$2.6
|
X
|
X
|
X
|
X
|
X
|
American Samoa Economic Development Credit
|
2016
|
-i-
|
X
|
X
|
X
|
X
|
X
|
15-Year Straight-Line Cost Recovery for Qualified Leasehold, Restaurant, and Retail Improvements
|
Permanent
|
$20.3
|
X
|
X
|
X
|
X
|
X
|
Look-Through Treatment of Payments Between Related Controlled Foreign Corporations under the Foreign Personal Holding Company Rules
|
2019
|
$7.8
|
X
|
X
|
X
|
X
|
Credit for Railroad Track Maintenance
|
2016a
$0.4
|
X
|
X
|
X
|
X
|
7-Year Recovery for Motorsport Racing Facilities
|
2016
|
$0.1
|
X
|
X
|
X
|
X
|
Deduction Allowable with Respect to Income Attributable to Domestic Production Activities in Puerto Rico
|
2016
|
$0.2
|
X
|
X
|
X
|
X
|
Modification of Tax Treatment of Certain Payments under Existing Arrangements to Controlling Exempt Organizations
|
Permanent
|
$0.1
|
X
|
X
|
X
|
X
|
Treatment of Certain Dividends of Regulated Investment Companies ("RICs")
|
Permanent
|
$1.4
|
X
|
X
|
X
|
X
|
RIC Qualified Investment Entity Treatment under FIRPTA
|
Permanent
|
$0.8
|
X
|
X
|
X
|
X
|
Mine Rescue Team Training Credit
|
2016
|
-i-
|
X
|
X
|
X
|
X
|
Election to Expense Mine-Safety Equipment
|
2016
|
—
|
X
|
X
|
X
|
X
|
Employer Wage Credit for Activated Military Reservists
|
Permanenta
$0.2
|
X
|
X
|
X
|
Special Expensing Rules for Film and Television Production
|
2016
|
-i-
|
X
|
X
|
X
|
Exclusion of 100% Gain on Certain Small Business Stock
|
Permanent
|
$8.8
|
X
|
X
|
X
|
Increase in Expensing to $500,000 / $2,000,000 and Expansion of Definition of Section 179 Property
|
Permanenta
$77.1
|
X
|
X
|
h
Empowerment Zone Tax Incentivesi
2016a
$0.5
|
X
|
X
|
X
|
Bonus Depreciationj
2019a
$11.3
|
X
|
X
|
X
|
j
j
j
Reduction in S Corporation Recognition Period for Built-In Gains Tax
|
Permanent
|
$1.5
|
X
|
X
|
Election to Accelerate AMT Credit in Lieu of Bonus Depreciation
|
2019
|
$17.0
|
X
|
X
|
Minimum Low-Income Housing Tax Credit (LIHTC) Rate for non-Federally Subsidized Buildings (9%)
|
Permanent
|
-i-
|
X
|
Xk
Treatment of Military Basic Housing Allowances under LIHTCl
Permanent
|
$0.1
|
X
|
X
|
Three-Year Depreciation for Race Horses Two Years or Youngerm
2016
|
—
|
X
|
Charitable Provisions
|
Enhanced Charitable Deduction for Contributions of Food Inventory
|
Permanenta
$2.2
|
X
|
X
|
X
|
X
|
n
Tax-Free Distributions From Individual Retirement Accounts for Charitable Purposes
|
Permanent
|
$8.8
|
X
|
X
|
X
|
X
|
Basis Adjustment to Stock of S Corporations Making Charitable Contributions of Property
|
Permanent
|
$0.6
|
X
|
X
|
X
|
X
|
Special Rules for Contributions of Capital Gain Real Property for Conservation Purposes
|
Permanenta
$1.2
|
X
|
X
|
X
|
o
Energy Provisions
Beginning-of-Construction Date for Eligible Facilities to Claim the Production Tax Credit (PTC) or the Investment Tax Credit (ITC) in Lieu of the PTCp
2016a,q
$1.4
|
X
|
X
|
r
s
r
s
s
s
Special Rule to Implement Electric Transmission Restructuring
|
2016
|
—
|
X
|
X
|
X
|
X
|
t
Credit for Construction of Energy Efficient New Homes
|
2016
|
$0.8
|
X
|
X
|
X
|
X
|
X
|
Energy Efficient Commercial Building Deduction
|
2016
|
$0.3
|
X
|
Xu
X
|
Credit for Section 25C Nonbusiness Energy Property
|
2016
|
$1.3
|
X
|
X
|
Xv
X
|
Alternative Fuel Vehicle Refueling Property
|
2016
|
$0.1
|
X
|
X
|
X
|
X
|
Incentives for Alternative Fuel and Alternative Fuel Mixtures
|
2016
|
$0.9
|
X
|
X
|
X
|
X
|
Incentives for Biodiesel and Renewable Dieselw
2016
|
$2.6
|
X
|
X
|
X
|
X
|
Second Generation (Cellulosic) Biofuel Producer Credit
|
2016
|
-i-
|
X
|
X
|
Credit for Production of Indian Coal
|
2016a
$0.1
|
X
|
X
|
Special Depreciation Allowance for Second Generation (Cellulosic) Biofuel Plant Propertyx
2016
|
-i-
|
X
|
X
|
Alternative motor vehicle credit for qualified fuel cell vehiclesy
2016
|
-i-
|
*
|
Credit for two-wheeled plug-in electric vehiclesz
2016
|
-i-
|
X
|
Source: CRS analysis of extending legislation; Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2014-2025, January 9, 2015, JCX-1-15; and U.S. Congress, Joint Committee on Taxation, Estimated Budget Effects of Division Q of Amendment #2 to the Senate Amendment to H.R. 2029 (Rules Committee Print 114-40), the "Protecting Americans from Tax Hikes Act of 2015," 114th Cong., December 16, 2015, JCX-143-15.
Notes: A "*" indicates that the provision expired in 2014, but not in 2013, and thus was not extended as a part of P.L. 113-295. An
“"-i-
“" indicates an estimated revenue
loss of less than $
550 million between 2016 and 2025. For additional information on specific provisions, see U.S. Congress, Senate Committee on the Budget,
Tax
CRS-10
q
Tax Expenditures: Compendium of Background Material on Individual Provisions, committee print, prepared by Congressional Research Service,
113th113th Cong.,
2nd2nd sess., December
2014.
a.
a.
P.L. 114-113, in addition to extending this provision, also modified the provision.
b.
This provision was extended as part of the Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142
).
c.
).
b. This provision was enacted as part of P.L. 110-142 and extended through 2012 in P.L. 110-343
.
c. .
d.
The Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170) extended the research credit through June 30, 2004. The credit was next
extended by the Working Families Tax Relief Act of 2004 (P.L. 108-311
).
d. ).
e.
The expiration date of the Work Opportunity Tax Credit for qualified veterans was extended through December 31, 2012, as part of P.L. 112-56. Under P.L.
112240112-240 the expiration date was extended through December 31, 2013, for all eligible employees.
e.
f.
The Work Opportunity Tax Credit was extended through August 31, 2011, as part of the U.S. Troop Readiness, Veterans
’' Care, Katrina Recovery, and Iraq
Accountability Appropriations Act of 2008 (P.L. 110-28
).
g.
).
f.
The exceptions under Subpart F for active financing income were extended for five years as part of the Job Creation and Worker Assistance Act of 2002 (P.L.
107147107-147) and for two years by the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222
).
h.
).
g. The Small Business Jobs Act of 2010 (P.L. 111-240) set the maximum amount a taxpayer can expense at $500,000, with the phaseout threshold raised to $2 million,
for tax years 2010 and 2011. The Tax Relief Act of 2010 set the expensing limit at $125,000 for 2012, with a phaseout threshold of $500,000. For background on
Section 179 expensing, see CRS Report RL31852, The Section 179 and Bonus Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress
, by [author name scrubbed].
i.
, by Gary
Guenther.
h. Empowerment zone tax incentives include (1) designation of an empowerment zone; (2) increased exclusion of gain; (3) empowerment zone tax-exempt bonds; (4)
empowerment zone employment credits; (5) increased expensing under IRC Section 179; (6) nonrecognition of gain on rollover of empowerment zone investments.
i.
j.
Under ATRA, 50% bonus depreciation was extended for one year. The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) created the initial bonus
depreciation allowance of 30%. The allowance was increased to 50% and extended as part of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA;
P.L. 108-27). Under the Economic Stimulus Act of 2008 (P.L. 110-185) bonus depreciation was reinstated at 50%. Bonus depreciation was again extended as part of
the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), the Small Business Jobs Act (P.L. 111-240), and the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). For more on the history of this provision, see CRS Report RL31852, The Section 179 and Bonus
Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress
, by [author name scrubbed].
k.
, by Gary Guenther.
j.
The Housing and Economic Recovery Act of 2008 (HERA,
P.L. 110-289) temporarily changed the LIHTC rate to not less than 9% for new construction placed in
service before December 31, 2013. The American Taxpayer Relief Act of 2012 (ATRA,
P.L. 112-240) extended the 9% floor for credit allocations made before
January 1, 2014.
k.
l.
This provision was enacted as part of the Housing and Economic Recovery Act of 2008 (P.L. 110-289
).
m.
).
l.
This provision was enacted as part of the Heartland, Habitat, Harvest, and Horticulture Act of 2008 (P.L. 110-246
).
n.
).
m. This provision was extended as part of the Pension Protection Act of 2006 (P.L. 109-280
).
o.
).
n. This provision was extended for two years, from 2007 through 2009, as part of the Food, Conservation, and Energy Act of 2008 (P.L. 110-234
).
p.
).
o. As part of ATRA, the expiration date for the renewable energy production tax credit (PTC) was modified such that facilities that were under construction but not
yet placed in service by the end of 2013 would qualify. The option to claim the ITC in lieu of the PTC was not available prior to 2009.
p.
q.
P.L. 114-113 also extended the PTC for wind through 2019, with a phaseout starting in 2017. The cost of the PTC for wind, as enacted in P.L. 114-113, was $14.5 billion between 2016 and 2025.
r.
The renewable energy PTC placed-in-service deadline was extended as part of the EPACT05 and as part of ARRA.
q.
s.
Prior to 2013, the renewable energy PTC expiration was a placed-in-service deadline. Historically, this placed-in-service deadline has been regularly extended as part
of tax extenders legislation.
CRS-11
r.
s.
t.
u.
v.
w.
x.
y.
CRS-12
t.
This provision was extended as part of the Energy Policy Act of 2005 (EPACT05; P.L. 109-58
).
u.
).
This provision was extended for five years, through 2013, in P.L. 110-343
.
.
v.
This provision was extended at a reduced rate of 10%, with the maximum credit reduced to $500. During 2009 and 2010, a 30% credit of up to $1,500 had been
available.
w.
Tax incentives for biodiesel were introduced as part of the American Jobs Creation Act of 2004 (AJCA; P.L. 108-357
).
x.
).
In addition to extending this provision through 2013, ATRA expanded the definition of qualified cellulosic biofuel production to include algae-based fuels.
y.
The alternative motor vehicle credit for qualified fuel cell vehicles was enacted as part of P.L. 109-58. When enacted, this provision was set to expire on December
31, 2014.
z.
This provision was enacted as part of P.L. 111-5, and extended through 2013 by P.L. 112-240. This provision expired at the end of 2013 and was not extended as
part of P.L. 113-295; however the provision is currently included in
S. 1946.
Charitable34
The four charitable provisions that expired at the end of 2014 have previously been extended multiple times. All four provisions were also made permanent in P.L. 114-113. The provisionS. 1946.
The Tax Relief Extension Act of 2015, in addition to extending this provision, would also modify the provision. Details on proposed modifications can be found in
U.S. Congress, Senate Committee on Finance, Tax Relief Extension Act of 2015, Report to Accompany S. 1946, 114th Cong., 1st sess., August 5, 2015, S.Rept. 114-119
(Washington: GPO, 2015).
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Charitable32
The four charitable provisions that expired at the end of 2014 have previously been extended
multiple times. Provisions providing an enhanced deduction for noncorporate businesses donating
food inventory
werewas first enacted in response to Hurricane Katrina in 2005.
3335 The remaining
charitable provisions
set to expire were first enacted as part of the Pension Protection Act of 2006
( (P.L. 109-280
).36
Energy37
).34
Energy35
The longest-standing energy-related provision that expired at the end of 2014 is the renewable
energy production tax credit (PTC).
36 38 The PTC was extended for two years, through 2016, as part of P.L. 114-113. P.L. 114-113 extended the PTC for wind through 2019, with a phase-down starting in 2017.
Several of the temporary energy-related tax provisions that
expired at the end of 2014 were first enacted as part of the Energy Policy Act of 2005 (EPACT05;
P.L. 109-58). These include the credit for construction of energy efficient new homes, the
deduction for energy efficient commercial buildings, and the credit for nonbusiness energy
property (also known as the tax credit for energy efficiency improvements for existing homes).
37
39 Certain tax incentives for alternative technology vehicles and alternative fuel vehicle refueling
property were also first included in EPACT05.
These provisions were all extended through 2016 in P.L. 114-113.
The alternative motor vehicle credit for qualified fuel cell vehicles also expired at the end of
2014. This provision was introduced as part of EPACT05, and was originally set to expire
December 31, 2014, when first introduced. EPACT05 incentives for other alternative motor
vehicles—including hybrids, alternative fuel, and advanced lean-burn technology vehicles—
expired at earlier dates. The credit for two-wheeled plug-in electric vehicles expired at the end of
2013, and was not extended as part of P.L. 113-295, but would be extended in the Tax Relief
Extension Act of 2015 (S. 1946). The credit was first enacted as part of the American Recovery
and Reinvestment Act (ARRA; P.L. 111-5) and was extended once previously by the American
Taxpayer Relief Act (ATRA; P.L. 112-240
). Both the alternative motor vehicle credit for qualified fuel cell vehicles and the credit for two-wheeled plug-in electric vehicles were extended through 2016 in P.L. 114-113.
The Cost of Extending Expired and Expiring Tax Provisions
As discussed above, Congress has regularly acted to temporarily extend expired or expiring tax provisions. In addition to temporarily extending expired provisions, P.L. 114-113 also made certain provisions permanent. As a result, the cost of the tax extenders in P.L. 114-113 was higher than the cost of other tax extenders proposals considered in the 114th Congress that would not have included permanent extensions.
Cost of Extensions Enacted in P.L. 114-113
In total, the extensions of tax extenders in P.L. 114-113, is estimated to reduce federal revenues by $628.8 billion between 2016 and 2025. Of that cost, nearly one-third ($202.1 billion) is attributable to extensions of provisions that were scheduled to expire in 2017 (the reduced earnings threshold for the refundable portion of the child tax credit; the American Opportunity Tax Credit; and modifications to the earned income tax credit) and the two-year moratorium on the medical device excise tax. Thus, the cost of extending the "tax extender" provisions listed in Table 1 is an estimated $426.8 billion between 2016 and 2025.
Of the total cost of the tax extenders in P.L. 114-113, $559.5 billion, or 89% of the total cost, is associated with permanent extensions. The estimated cost of permanent extension of provisions listed in Table 1 (provisions that had expired in 2014 and were made permanent in P.L. 114-113) is $361.4 billion.
Of the total cost of tax extenders in P.L. 114-113, a small portion, $17.7 billion (or less than 3%) was for the two-year extension of provisions that had expired in 2014 through 2016.
Previous Cost Estimates for Temporary and Permanent Extensions
Before P.L. 114-113 was passed, legislation was considered in the House in the 114th Congress that would have made permanent certain temporary tax provisions. Cost of temporary as opposed to permanent extension has, in the past, been one consideration in the debate surrounding the extension of temporary tax provisions.
Cost of Temporary Extension
The Senate Finance Committee reported legislation in 2015).
32
The Tax Increase Prevention Act of 2014 contained separate subtitles for individual, business, and energy extenders,
but not for charitable extenders. Charitable extenders have been separately identified for the purposes of this report, as
there was considerable debate regarding permanent extension of these provisions in the 113th and 114th Congresses
(discussed below). For more information, see CRS Report R43517, Recently Expired Charitable Tax Provisions (“Tax
Extenders”): In Brief, by Jane G. Gravelle and Molly F. Sherlock.
33
For more information, see CRS Report RL34608, Tax Issues Relating to Charitable Contributions and
Organizations, by Jane G. Gravelle and Molly F. Sherlock.
34
For more information on the provision allowing tax-free distributions from retirement accounts for charitable
contributions, see CRS Report RS22766, Qualified Charitable Distributions from Individual Retirement Accounts:
Features and Legislative History, by John J. Topoleski and Gary Sidor.
35
For general background on energy tax policy, see CRS Report R43206, Energy Tax Policy: Issues in the 114th
Congress, by Molly F. Sherlock and Jeffrey M. Stupak and CRS Report R41227, Energy Tax Policy: Historical
Perspectives on and Current Status of Energy Tax Expenditures, by Molly F. Sherlock.
36
For more information, see CRS Report R43453, The Renewable Electricity Production Tax Credit: In Brief, by
Molly F. Sherlock. The PTC was first enacted in 2002. When first enacted, the PTC was only available for wind and
closed-loop biomass technologies. Over time, Congress has expanded the list of qualifying technologies.
37
For more information, see CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by Margot
L. Crandall-Hollick and Molly F. Sherlock.
Congressional Research Service
13
Tax Provisions that Expired in 2014 (“Tax Extenders”)
The Cost of Extending Expired and Expiring Tax
Provisions
As discussed above, Congress has regularly acted to temporarily extend expired or expiring tax
provisions. Legislation has been considered in the House in the 114th Congress that would make
permanent certain tax provisions that are currently part of the tax extenders. Cost of temporary as
opposed to permanent extension has, in the past, been one consideration in the debate surrounding
the extension of temporary tax provisions.
Cost of Temporary Extension
The Senate Finance Committee has reported legislation, the Tax Relief Extension Act of 2015 (
S. 1946S.
1946), that would retroactively extend expired tax provisions, for two years, through 2016. The
cost of extending individual provisions JCT estimated that extending tax extenders, as proposed in
S. 1946, would have reducedS. 1946 is reported in Table 1. The JCT
has estimated that extending these provisions would reduce revenue by $97.1 billion between
2016 and 2025.
38 40 S. 1946 also
includesincluded several revenue raising provisions, which
bringbrought the cost of
the proposal to $96.9 billion. Neither of these figures include macroeconomic effects.
With macroeconomic effects included, the cost of extending expired provisions, as proposed in
S. 1946, wasS.
1946, is $86.6 billion over the 10-year budget window. According to the JCT, extending certain
expired provisions affecting businesses, particularly the provision allowing businesses to expense
50% of investments, is expected to increase economic growth in the near term. Thus, the cost
estimate when macroeconomic effects are included is less than the cost estimate that does not
incorporate macroeconomic effects. Since S. 1946 is projected to increase the federal debt, part of
the gain in economic growth from extending expired business-related provisions
iswould be expected to be
offset by higher interest rates, which tend to slow economic growth. The net effect of JCT
’s
's macroeconomic analysis, however,
iswas increased economic growth within the budget window,
leading to a lower cost estimate for S. 1946
.
.
Cost of Permanent Extension
The Congressional Budget Office (CBO) provides estimated costs of extending all tax provisions
scheduled to expire before 2025 (see Table 2
).41 The estimates below reflect information provided before the recent extensions enacted in P.L. 114-113.).39 CBO
’'s estimates can be viewed as the cost of a
long-term extension. According to CBO
’'s estimates, over the 2016 to 2025 budget window,
extending all expiring tax provisions would reduce revenues by $897.9 billion;
extending bonus depreciation would cost $223.6 billion and extending Section
179 expensing would cost $60.8 billion;40 and
38
U.S. Congress, Joint Committee on Taxation, A Report to the Congressional Budget Office of the Macroeconomic
Effects of the “Tax Relief Extension Act of 2015,” as Ordered to be Reported by the Senate Committee on Finance,
committee print, 114th Cong., August 4, 2015, JCX-107-15.
39
CBO provides this estimate to calculate their alternative fiscal scenario. CBO’s baseline for spending and revenues
assumes current law. Thus, revenue levels under CBO’s baseline assume that all tax policies expire as scheduled. The
alternative fiscal scenario assumes that current policies remain in place (i.e., expiring tax provisions are extended). The
estimated revenues that would be raised from extending certain provisions might change depending on how provisions
are stacked (i.e., interaction effects might cause revenue estimates for specific provisions to be higher or lower
depending on what other provisions are also assumed to have been extended).
40
For more on bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation:
Economic and Budgetary Issues, by Jane G. Gravelle.
Congressional Research Service
14
Tax Provisions that Expired in 2014 (“Tax Extenders”)
179 expensing would cost $60.8 billion;42 and
extending expansions to the child tax credit, the earned income tax credit, and the
American Opportunity Tax Credit currently scheduled to expire at the end of
2017 would cost $202.8 billion.
41
43 Of the 70 tax provisions set to expire before the end of 2025
in CBO's estimates, 52 had , 52 expired at the end of 2014. Thus,
most of the revenue cost associated with extending expiring provisions is for provisions that
have
already expired.
were either extended or made permanent in P.L. 114-113.
Since tax extender provisions are assumed to expire as scheduled by CBO, their extension—even
if expected by policymakers—is not included in CBO
’'s current law revenue baseline. As a result,
CBO’ CBO's revenue projections are higher than actual revenue levels that are likely to occur.
Consequently, projected budget deficits under the current law baseline are smaller than actual
deficits that are likely to occur.
The baseline used in the President’s FY2016 budget proposal also makes adjustments for certain
expiring provisions. Specifically, the President’s FY2016 budget uses a baseline that assumes that
the American Opportunity Tax Credit (AOTC), expansions to the earned income tax credit
(EITC), and child tax credit (CTC) are all made permanent.
deficits that are likely to occur.
The cost of providing a short-term extension, as is typical in
“"tax extenders
”" legislation, is less
than the cost of extending expiring provisions through the budget window, as is done by CBO for
the purposes of constructing the alternative fiscal scenario baseline. The CBO scores presented
here, some might argue, provide a more accurate measure of the overall or long-term budget
impact of temporary tax provisions. The Joint Committee on Taxation (JCT) scores
accompanying extenders legislation reflect the budget impact of the temporary extension relative
to current law.
If expiring provisions are temporarily extended, the 10-year revenue cost may be less than the
cost in year 2015, as many of the expired provisions are tax deferrals, or timing provisions. Bonus
depreciation is one example of a timing provision, where the short-term cost of extension is
greater than the long-term or budget window cost. The one-year extension of bonus depreciation
enacted as part of the Taxpayer Relief Act of 2014 (P.L. 113-295) cost an estimated $1.2 billion
over the 10-year budget window; however, the one-year revenue loss of the same provision in
2015 was $45.3 billion, with much of the cost recovered in the later years in the budget window.
Bonus depreciation was extended through 2019 in P.L. 114-113, at a cost of $11.3 billion over the 10-year budget window. The cost in 2016 is estimated to be $90.6 billion, with much of the estimated revenue cost in 2016, 2017, and 2018, recovered later in the budget window. As a timing provision, bonus depreciation shifts cost recovery forward, resulting in revenue
losses in earlier years, with part of that revenue loss recovered in later years. In contrast to a
temporary extension, making bonus depreciation permanent would cost $223.6 billion over the
10-year budget window (see Table 2
).
Table 2. The Cost of Permanently ).
41
Extending these provisions would reduce revenues by $44.3 billion between 2016 and 2025, and increase outlays by
$158.5 billion.
Congressional Research Service
15
Table 2. The Cost of Extending Expired and Expiring Provisions
(billions of dollars)
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2016-2025
Extend bonus depreciationa
68.6
38.6
29.0
21.2
15.2
12.0
10.2
9.3
9.5
9.9
223.6
Extend Section 179 expensing
13.8
10.2
8.0
6.2
4.8
4.0
3.4
3.3
3.6
3.4
60.8
2.8
29.1
28.9
28.8
28.7
28.3
28.2
28.0
202.8
Extend Temporary ARRA
Provisionsb
Extend all Other Expired or Expiring
Tax Provisionsc
Totald
26.6
29.1
32.9
36.0
39.1
43.2
46.3
49.8
52.4
55.2
410.7
109.0
78.0
72.7
92.5
88.0
88.1
88.6
90.7
93.7
96.5
897.9
Source:
(billions of dollars)
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
2016-2025
|
Extend bonus depreciationa
68.6
|
38.6
|
29.0
|
21.2
|
15.2
|
12.0
|
10.2
|
9.3
|
9.5
|
9.9
|
223.6
|
Extend Section 179 expensing
|
13.8
|
10.2
|
8.0
|
6.2
|
4.8
|
4.0
|
3.4
|
3.3
|
3.6
|
3.4
|
60.8
|
Extend Temporary ARRA Provisionsb
2.8
|
29.1
|
28.9
|
28.8
|
28.7
|
28.3
|
28.2
|
28.0
|
202.8
|
Extend all Other Expired or Expiring Tax Provisionsc
26.6
|
29.1
|
32.9
|
36.0
|
39.1
|
43.2
|
46.3
|
49.8
|
52.4
|
55.2
|
410.7
|
Totald
109.0
|
78.0
|
72.7
|
92.5
|
88.0
|
88.1
|
88.6
|
90.7
|
93.7
|
96.5
|
897.9
|
Source: CRS calculations using data published in the Congressional Budget Office, The Budget and Economic Outlook, Washington, DC, January 26, 2015,
http://www.cbo.gov/publication/
45069.
Notes:
a. 45069.
Notes:
a.
The cost of extending bonus depreciation depends on whether the cost is estimated alongside other tax policy changes, such as an extension in Section 179
expensing, or in isolation. See Table 3
below for additional cost estimates for extending bonus depreciation.
b.
b.
Provisions are currently scheduled to expire on December 31, 2017. Includes a lower earned income threshold for the refundable portion of the child tax credit,
expansions to the earned income tax credit (EITC), and the American Opportunity Tax Credit (AOTC). The figures in this line include both the reduction in tax
revenues as well as the change in outlays from refundable tax credits.
c.
c.
Expired provisions include those that expired or are set to expire between December 31, 2014, and December 31, 2025.
d.
d.
This line includes the cost of
permanently extending all provisions scheduled to expire between 2014 and 2024.
CRS-16
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Recent “Tax Extenders” Legislation and Proposals
During the 113th Congress, the House considered legislation to make permanent certain expired
tax provisions. In the 114th Congress, the House has again considered proposals to make
permanent certain expired tax provisions. Legislation has also been reported out of the Senate
Recent "Tax Extenders" Legislation and Proposals
As discussed above, the tax extenders legislation that was passed in December 2015, as part of P.L. 114-113, made permanent a number of temporary tax provisions, while temporarily extending other expired tax provisions. Earlier in the 114th Congress, the House had considered proposals to make permanent certain expired tax provisions. Legislation was also reported out of the Senate Committee on Finance that would temporarily extend expired tax provisions.
114th Congress
The Senate Finance Committee has reported legislation, During the 113th Congress, the House had also considered legislation to make permanent certain expired tax provisions.
114th Congress
Before P.L. 114-113 was signed into law, there was other action on extenders in the 114th Congress. The Senate Finance Committee reported the Tax Relief Extension Act of 2015 (
S. 1946), whichS.
1946), that would retroactively extend expired tax provisions
, for two years, through 2016.
The House
hashad passed legislation to make permanent eight of the temporary tax provisions that
expired at the end of 2014 (see Table 3). America
’'s Small Business Tax Relief Act of 2015 (
H.R. 636) would have madeH.R.
636), as passed in the House, would make permanent the enhanced expensing allowances under
Section 179 and also included the text from bills that would extend expired S corporation
provisions (the Permanent S Corporation Built-in Gains Recognition Period Act of 2015
(H.R.
629)[H.R. 629] and the Permanent S Corporation Charitable Contribution Act of 2015
([H.R. 630
]). Three
expired charitable provisions
arewere part of the America Gives More Act of 2015 (H.R. 644): (1) the
enhanced deduction for contributions of food inventory; (2) the provision allowing for tax-free
distributions from Individual Retirement Accounts (IRAs) for charitable purposes; and (3) the
special rules for contributions of capital gain real property for conservation purposes. The
American Research and Competitiveness Act of 2015 (
H.R. 880) would have modified and madeH.R. 880), as passed in the House, would
modify and make permanent the research tax credit.
4244 Legislation
hashad also passed the House that
would
makehave made permanent the option to deduct state and local sales taxes in lieu of state and local
income taxes (H.R. 622). Taken together, these eight measures would
have cost $317.5 billion over the
10-year budget window, excluding potential macroeconomic effects.
The President’s FY2016 Budget Proposal
The President’s FY2016 budget also proposes to permanently extend or modify certain expired
provisions, and temporarily extend others.43 Provisions that would be permanently extended (and
in some cases modified) include (1) the increased expensing for certain businesses under Section
179; (2) the 100% exclusion for qualified small business stock; (3) the research and
experimentation (R&E) tax credit; (4) certain employment-related credits (the Work Opportunity
Tax Credit (WOTC) and the Indian employment credit); (5) incentives for renewable electricity
(the production tax credit (PTC) and investment tax credit (ITC)); (6) the energy-efficient
commercial building deduction; (7) the New Markets Tax Credit (NMTC); and (8) the enhanced
deduction for conservation easements. The President’s budget also proposes permanently
extending the exception under Subpart F for active financing income and the look-through
treatment of payments between related controlled foreign corporations (CFCs) as part of a
broader reform to the U.S. international tax system.44
42
For more information, see CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th
Congress, by Gary Guenther.
43
For a complete description of the tax-related proposals in the President’s FY2016 budget, see Department of the
Treasury, General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals, February 2015,
http://www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.
44
For background information on international tax reform, see CRS Report RL34115, Reform of U.S. International
Taxation: Alternatives, by Jane G. Gravelle.
Congressional Research Service
17
Tax Provisions that Expired in 2014 (“Tax Extenders”)
Provisions that would be temporarily extended in the President’s FY2016 budget proposal include
(1) the exclusion for cancellation of home mortgage debt (through 2017); (2) the tax credit for
second generation (cellulosic) biofuel (through 2020, with a phaseout between 2021 and 2024);
and (3) the tax credit for energy-efficient new homes (through 2025).45
As noted above, the President’s FY2016 budget assumes that the American opportunity tax credit
(AOTC), the earned income tax credit (EITC) expansions, and the child tax credit (CTC)
expansions, which were extended through 2017 as part of ARTA, are made permanent.
113th Congress
During the 113th 10-year budget window, excluding potential macroeconomic effects.
In addition to the proposals to make permanent expired tax provisions that were passed in the House, the Committee on Ways and Means had reported other legislation during the 114th Congress that would have made permanent other expired provisions (see Table 3).
113th Congress
During the 113th Congress, various bills were considered to either extend or make permanent
certain tax extender provisions. Ultimately, a one-year
“"tax extenders
”" bill was passed and
enacted late in the year (the Tax Increase Prevention Act of 2014
([P.L. 113-295
)] was signed into
law on December 19, 2014). Earlier in the year, the Senate Finance Committee had reported a
two-year extenders package, the Expiring Provisions Improvement Reform and Efficiency
(EXPIRE) Act (S. 2260). The EXPIRE Act proposed extending most expiring provisions for two
years, through 2015.46
The House also considered legislation to make certain expiring tax provisions permanent during
the 113th Congress. As noted in Table 3, the House passed legislation that would have made
permanent nine provisions that are currently part of the tax extenders. Taken together,
permanently extending these nine provisions would have reduced revenues by an estimated
$511.4 billion over the 10-year budget window. Six of these nine provisions were included in the
Jobs for America Act (H.R. 4), which also passed the House in the 113th Congress.47 Three other
charitable-related provisions were passed as part of the America Gives More Act of 2014 (H.R.
4719). The Committee on Ways and Means reported legislation during the 113th Congress that
would have made two additional international-related extender provisions permanent, although
this legislation was not considered in the full House.
45
The President’s FY2016 budget also proposed to provide additional funds for or to modify certain other tax
incentives that are not necessarily expired (although limited allocations may be available). For example, the FY2016
budget proposes additional funds be provided for tax incentives for carbon dioxide sequestration, advanced energy
manufacturing tax credits, credits for certain alternative technology vehicles, geographically targeted incentives for
economic development, and support of tax-favored financing for infrastructure.
46
In the Senate, the EXPIRE Act became an amendment to H.R. 3474, and a motion to end debate on H.R. 3474 was
voted down on May 15, 2014.
47
The Jobs for America Act (H.R. 4) contained the text of a number of previously passed House bills.
Congressional Research Service
18
Table 3. House Legislation to Permanently Extend Expired Tax Provisions
113th and 114th Congresses
Cost of
Extension
(billions of
dollars)
114th Congress
Legislative
Action
Legislation
113th Congress
Legislative
Action
Legislation
Individual Provisions
Deduction for State and Local
General Sales Taxes
$42.4
Passed in the
House
State and Local Sales Tax
Deduction Fairness Act of 2015
(H.R. 622)
$181.6
Passed in the
House
American Research And
Competitiveness Act Of 2015
(H.R. 880)
Business Provisions
Passed in the
House
American Research and Competitiveness
Act of 2014 (H.R. 4438) and Jobs for
America Act (H.R. 4)
$58.8
Approved by the
Committee on
Ways and Means
Permanent Active Financing Exception Act
of 2014 (H.R. 4429)
Look-Through Treatment of
Payments Between Controlled
Foreign Corporations under the
Foreign Personal Holding
Company Rules
$20.3
Approved by the
Committee on
Ways and Means
Permanent CFC Look-Through Act of
2014 (H.R. 4464)
Increase in Expensing to $500,000
/ $2,000,000 and Expansion of
Definition of Section 179 Property
$77.1
Passed in the
House
America’s Small Business Tax Relief Act of
2014 (H.R. 4457) and Jobs for America Act
(H.R. 4)
$244.7a
Passed in the
House
H.R. 4718, to amend the Internal Revenue
Code of 1986 to modify and make
permanent bonus depreciation and Jobs for
America Act (H.R. 4)
$24.5
Passed in the
House
H.R. 4718, to amend the Internal Revenue
Code of 1986 to modify and make
permanent bonus depreciation and Jobs for
America Act (H.R. 4)
Tax Credit for Research and
Experimentation Expenses
Exceptions under Subpart F for
Active Financing Income
Bonus Depreciation
Election to Accelerate AMT
Credits in Lieu of Additional FirstYear Depreciation
CRS-19
Passed in the
House
America’s Small Business Tax
Relief Act of 2015 (H.R. 636)
Cost of
Extension
(billions of
dollars)
114th Congress
113th Congress
Legislative
Action
Legislation
Legislative
Action
$1.5
Passed in the
House
America’s Small Business Tax
Relief Act of 2015 (H.R. 636)
Passed in the
House
S Corporation Permanent Tax Relief Act of
2014 (H.R. 4453) and Jobs for America Act
(H.R. 4)
Enhanced Charitable Deduction
for Contributions of Food
Inventory
$2.2
Passed in the
House
America Gives More Act of 2015
(H.R. 644)
Passed in the
House
America Gives More Act of 2014 (H.R.
4719)
Tax-Free Distributions From
Individual Retirement Accounts for
Charitable Purposes
$8.8
Passed in the
House
America Gives More Act of 2015
(H.R. 644)
Passed in the
House
America Gives More Act of 2014 (H.R.
4719)
Basis Adjustment to Stock of S
Corporations Making Charitable
Contributions of Property
$0.6
Passed in the
House
America’s Small Business Tax
Relief Act of 2015 (H.R. 636)
Passed in the
House
S Corporation Permanent Tax Relief Act of
2014 (H.R. 4453) and Jobs for America Act
(H.R. 4)
Special Rules for Contributions of
Capital Gain Real Property for
Conservation Purposes
$1.2
Passed in the
House
America Gives More Act of 2015
(H.R. 644)
Passed in the
House
America Gives More Act of 2014 (H.R.
4719)
Reduction in S Corporation
Recognition Period for Built-In
Gains Tax
Legislation
Charitable Provisions
Source: years, through 2015.45
Table 3. House Legislation to Permanently Extend Expired Tax Provisions (before P.L. 114-113)
113th and 114th Congresses
114th Congress
|
113th Congress
|
Cost of Extension (billions of dollars)
|
Legislative Action
|
Legislation
|
Legislative Action
|
Legislation
|
Individual Provisions
|
Above-the-Line Deduction of up to $250 for Teacher Classroom Expenses
|
$2.5
|
Approved by the Committee on Ways and Means
|
Educator Tax Relief Act of 2015 (H.R. 2940)
|
Deduction for State and Local General Sales Taxes
|
$42.4
|
Passed in the House
|
State and Local Sales Tax Deduction Fairness Act of 2015 (H.R. 622)
|
Business Provisions
|
Tax Credit for Research and Experimentation Expenses
|
$181.6
|
Passed in the House
|
American Research And Competitiveness Act Of 2015 (H.R. 880)
|
Passed in the House
|
American Research and Competitiveness Act of 2014 (H.R. 4438) and Jobs for America Act (H.R. 4)
|
Exceptions under Subpart F for Active Financing Income
|
$78.0
|
Approved by the Committee on Ways and Means
|
To amend the Internal Revenue Code of 1986 to permanently extend the subpart F exemption for active financing income (H.R. 961)
|
Approved by the Committee on Ways and Means
|
Permanent Active Financing Exception Act of 2014 (H.R. 4429)
|
Look-Through Treatment of Payments Between Controlled Foreign Corporations under the Foreign Personal Holding Company Rules
|
$21.8
|
Approved by the Committee on Ways and Means
|
Permanent CFC Look-Through Act of 2015 (H.R. 1430)
|
Approved by the Committee on Ways and Means
|
Permanent CFC Look-Through Act of 2014 (H.R. 4464)
|
Increase in Expensing to $500,000 / $2,000,000 and Expansion of Definition of Section 179 Property
|
$77.1
|
Passed in the House
|
America's Small Business Tax Relief Act of 2015 (H.R. 636)
|
Passed in the House
|
America's Small Business Tax Relief Act of 2014 (H.R. 4457) and Jobs for America Act (H.R. 4)
|
Bonus Depreciation and Election to Accelerate AMT Credits in Lieu of Additional First-Year Depreciation
|
$280.7
|
Approved by the Committee on Ways and Means
|
To amend the Internal Revenue Code of 1986 to modify and make permanent bonus depreciation (H.R. 2510)
|
Passed in the House
|
H.R. 4718, to amend the Internal Revenue Code of 1986 to modify and make permanent bonus depreciation and Jobs for America Act (H.R. 4)
|
Reduction in S Corporation Recognition Period for Built-In Gains Tax
|
$1.5
|
Passed in the House
|
America's Small Business Tax Relief Act of 2015 (H.R. 636)
|
Passed in the House
|
S Corporation Permanent Tax Relief Act of 2014 (H.R. 4453) and Jobs for America Act (H.R. 4)
|
15-Year Straight-Line Cost Recovery for Qualified Leasehold, Restaurant, and Retail Improvements
|
$28.4
|
Approved by the Committee on Ways and Means
|
Restaurant and Retail Jobs and Growth Act (H.R. 765)
|
Charitable Provisions
|
Enhanced Charitable Deduction for Contributions of Food Inventory
|
$2.2
|
Passed in the House
|
America Gives More Act of 2015 (H.R. 644)
|
Passed in the House
|
America Gives More Act of 2014 (H.R. 4719)
|
Tax-Free Distributions From Individual Retirement Accounts for Charitable Purposes
|
$8.8
|
Passed in the House
|
America Gives More Act of 2015 (H.R. 644)
|
Passed in the House
|
America Gives More Act of 2014 (H.R. 4719)
|
Basis Adjustment to Stock of S Corporations Making Charitable Contributions of Property
|
$0.6
|
Passed in the House
|
America's Small Business Tax Relief Act of 2015 (H.R. 636)
|
Passed in the House
|
S Corporation Permanent Tax Relief Act of 2014 (H.R. 4453) and Jobs for America Act (H.R. 4)
|
Special Rules for Contributions of Capital Gain Real Property for Conservation Purposes
|
$1.2
|
Passed in the House
|
America Gives More Act of 2015 (H.R. 644)
|
Passed in the House
|
America Gives More Act of 2014 (H.R. 4719)
|
Source: Joint Committee on Taxation revenue estimates for the legislation listed in the table can be found at: https://www.jct.gov/publications.html
.
.
Notes: The cost of extension is the estimated revenue loss in the most recent proposal considered by the House. This table includes only legislation that was
considered either at the committee level or on the House floor.
a. The estimated cost of making bonus depreciation permanent, as proposed in H.R. 4718, was $262.9 billion over the 2014 through 2024 budget window. The lower
revenue cost estimate in H.R. 4 is likely due to interaction effects with other provisions that would be extended in H.R. 4, specifically the increased expensing
allowances under Section 179. Thus, absent these other provisions, the cost of bonus depreciation would likely be greater.
CRS-20
Tax Provisions that Expired in 2014 (“Tax Extenders”)
The House also considered legislation to make certain expiring tax provisions permanent during the 113th Congress. As noted in Table 3, the House passed legislation that would have made permanent nine provisions that are currently part of the tax extenders. Taken together, permanently extending these nine provisions would have reduced revenues by an estimated $511.4 billion over the 10-year budget window. Six of these nine provisions were included in the Jobs for America Act (H.R. 4), which also passed the House in the 113th Congress.46 Three other charitable-related provisions were passed as part of the America Gives More Act of 2014 (H.R. 4719). The Committee on Ways and Means reported legislation during the 113th Congress that would have made two additional international-related extender provisions permanent, although this legislation was not considered in the full House.
Tax Provisions that Expired in 2013 that Were Not Extended by P.L. 113-295
Several provisions that had expired at the end of 2013 were not extended as part of the Tax
Increase Prevention Act of 2014 (P.L. 113-295). Two of these provisions would have been
extended in the EXPIRE Act, but were not included in P.L. 113-295: the health coverage tax
credit and the credit for electric-drive motorcycles and three-wheeled vehicles.
Both of these provisions have been extended in subsequent legislation.
The health coverage tax credit had not been extended as part of past
“"tax extenders
”" legislation.
The health coverage tax credit was first enacted, without an expiration date, as part of the Trade
Act of 2002 (P.L. 107-240). A January 1, 2014, termination date was enacted as part of an act to
extend the Generalized System of Preferences in 2011 (P.L. 112-40
).47).48 The health coverage tax
credit was modified and retroactively extended
through December 31, 2019, as part of the Trade Preferences Extension Act of
2015 (P.L. 114-27), signed into law on June 29, 2015.
The other provision that was not extended in P.L. 113-295, but would have been extended by the
EXPIRE Act, was the credit for electric-drive motorcycles and three-wheeled vehicles. In recent
years, a number of incentives have been available for various alternative technology vehicles.
There are currently incentives available for plug-in electric vehicles. Incentives for most other
alternative technology vehicles have expired.
49
48 The credit for two-wheeled electric plug-in vehicles was extended through 2016 in P.L. 114-113.
Two other energy-related provisions were not extended past their January 1, 2014, termination
date: the placed-in-service date for partial expensing of certain refinery property and the credit for
energy efficient appliances. The EXPIRE Act did not propose extending either of these
provisions.
Two disaster-related provisions that expired at the end of 2013—one that provided tax-exempt
bond financing authority for facilities in the New York Liberty Zone and another related to the
replacement period for nonrecognition of gain for areas damaged by the 2008 Midwestern
storms—were not extended in P.L. 113-295. The EXPIRE Act also did not include an extension
for these disaster-related provisions.
Author Contact Information
Molly F. Sherlock
Coordinator of Division Research and Specialist
msherlock@crs.loc.gov, 7-7797
Acknowledgments
Jeffrey Stupak, Research Assistant, assisted in updating this report.
48
For more information, see CRS Report RL32620, Health Coverage Tax Credit, by Bernadette Fernandez.
For more information, see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A
Summary of Federal Programs, by Lynn J. Cunningham et al., and CRS Report R43206, Energy Tax Policy: Issues in
the 114th Congress, by Molly F. Sherlock and Jeffrey M. Stupak.
49
Congressional Research Service
21
for these disaster-related provisions.
Author Contact Information
[author name scrubbed], Coordinator of Division Research and Specialist
([email address scrubbed], [phone number scrubbed])
Acknowledgments
Jeffrey Stupak, Research Assistant, assisted in updating previous versions of this report.
Footnotes
1.
|
For additional background, see CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012, by [author name scrubbed].
|
2.
|
Provisions that had been allowed to expire at the end of 2011 were extended retroactively. In addition to the "tax extenders" discussed in this report, several provisions first enacted as part of the American Recovery and Reinvestment Act (ARRA;P.L. 111-5) were temporarily extended in ATRA.
|
3.
|
This report contains information on Title 1 of Division Q of P.L. 114-113, focusing on extenders. There were additional tax provisions in other titles of Division Q that are beyond the scope of this report.
|
4.
|
For more information, including background on the changes in P.L. 114-113, see CRS Report R44147, Excise Tax on High-Cost Employer-Sponsored Health Coverage: In Brief, by [author name scrubbed].
|
5.
|
For additional background on this provision, see CRS Report R44403, Crude Oil Exports and Related Provisions in P.L. 114-113: In Brief, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].
|
6.
|
For background on expiring provisions that would be made permanent in the Tax Reform Act of 2014, see U.S. Congress, Joint Committee on Taxation, Description of Expiring Business-Related Tax Provisions Made Permanent or Extended under the "Tax Reform Act of 2014," a Discussion Draft of the Chairman of the House Committee on Ways and Means to Reform the Internal Revenue Code, committee print, 113th Cong., April 4, 2014, JCX-35-14, available at https://www.jct.gov/publications.html?func=startdown&id=4581.
|
7.
|
For a history of the tax extenders, see U.S. Congress, Senate Committee on Rules and Administration, The Tax Extenders: How Congressional Rules and Outside Interests Shape Policy, committee print, prepared by Congressional Research Service, 113th Cong., 2nd sess., December 2014, S. Prt. 113-30, pp. 441-456, available at http://www.gpo.gov/fdsys/pkg/CPRT-113SPRT89394/pdf/CPRT-113SPRT89394.pdf#page=453.
|
8.
|
U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?id=b1604e2e-5056-a032-52ff-dd661f9280f6.
|
9.
|
See U.S. Government Accountability Office, Biofuels: Potential Effects and Challenges of Required Increases in Production and Use, GAO-09-44, August 2009, http://www.gao.gov/new.items/d09446.pdf and U.S. Government Accountability Office, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP, March 2011, http://www.gao.gov/assets/320/315920.pdf.
|
10.
|
For a discussion of bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation: Economic and Budgetary Issues, by [author name scrubbed]. For background on these policies, see CRS Report RL31852, The Section 179 and Bonus Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress, by [author name scrubbed].
|
11.
|
For more information, see CRS Report R42839, Tax Provisions to Assist with Disaster Recovery, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].
|
12.
|
For more information, see CRS Report RL34212, Analysis of the Tax Exclusion for Canceled Mortgage Debt Income, by [author name scrubbed] and [author name scrubbed].
|
13.
|
For more information, see CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief Description and Economic Analysis, by [author name scrubbed] and [author name scrubbed].
|
14.
|
For more information, see CRS Report R41635, ARRA Section 1603 Grants in Lieu of Tax Credits for Renewable Energy: Overview, Analysis, and Policy Options, by [author name scrubbed] and [author name scrubbed].
|
15.
|
This point was made in U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?id=b1604e2e-5056-a032-52ff-dd661f9280f6 and U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
|
16.
|
U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating Certain Expiring Tax Provisions, Testimony of Donald B. Marron, 112th Cong., June 8, 2012, available at http://waysandmeans.house.gov/uploadedfiles/marron.pdf.
|
17.
|
U.S. Congress, Senate Committee on Finance, Extenders and Tax Reform: Seeking Long-Term Solutions, Testimony of Dr. Rosanne Altshuler, 112th Cong., January 31, 2012, available at http://www.finance.senate.gov/hearings/hearing/?id=b1604e2e-5056-a032-52ff-dd661f9280f6.
|
18.
|
This section is adapted from archived CRS Report RL32367, Certain Temporary Tax Provisions that Expired in December 2009 ("Extenders"), by [author name scrubbed].
|
19.
|
Using these "criteria for good tax policy" to evaluate tax extenders was discussed in U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Framework for Evaluating Certain Expiring Tax Provisions, Testimony of Dr. Jim White, 112th Cong., June 8, 2012, available at http://waysandmeans.house.gov/uploadedfiles/white.pdf.
|
20.
|
Market failure occurs when the marginal benefit of an action does not equal the marginal cost. For example, polluting forms of energy production cause social costs that are not taken into account by the producer; hence, there is an argument for taxing this type of energy or, alternatively, subsidizing less-polluting firms.
|
21.
|
Stanley S. Surrey, "Tax Incentives as a Device for Implementing Government Policy: A Comparison with Direct Government Expenditures," Harvard Law Review, vol. 83, no. 4 (February 1970), pp. 705-738.
|
22.
|
For more information, see CRS Report R43688, Selected Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] and [author name scrubbed].
|
23.
|
For more information, see CRS Report RL32781, Federal Deductibility of State and Local Taxes, by [author name scrubbed] and [author name scrubbed].
|
24.
|
For more information, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary Effects, by [author name scrubbed].
|
25.
|
For general background on expired housing-related provisions, see CRS Report R43449, Recently Expired Housing Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed].
|
26.
|
For more information, see CRS Report R43510, Selected Recently Expired Business Tax Provisions ("Tax Extenders"), by [author name scrubbed], [author name scrubbed], and [author name scrubbed].
|
27.
|
For more information, see CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th Congress, by [author name scrubbed].
|
28.
|
For more information, see CRS Report R41028, The Rum Excise Tax Cover-Over: Legislative History and Current Issues, by [author name scrubbed].
|
29.
|
For more information, see CRS Report R43729, The Work Opportunity Tax Credit, by [author name scrubbed] and [author name scrubbed].
|
30.
|
For more information, see CRS Report R40523, Tax Credit Bonds: Overview and Analysis, by [author name scrubbed].
|
31.
|
For more information, see CRS Report R41852, U.S. International Corporate Taxation: Basic Concepts and Policy Issues, by [author name scrubbed] and [author name scrubbed].
|
32.
|
For more information, see CRS Report RL34402, New Markets Tax Credit: An Introduction, by [author name scrubbed] and [author name scrubbed] and CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed].
|
33.
|
For more information, see CRS Report RL31852, The Section 179 and Bonus Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress, by [author name scrubbed]. For more on bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation: Economic and Budgetary Issues, by [author name scrubbed].
|
34.
|
The Tax Increase Prevention Act of 2014 contained separate subtitles for individual, business, and energy extenders, but not for charitable extenders. Charitable extenders have been separately identified for the purposes of this report, as there was considerable debate regarding permanent extension of these provisions in the 113th and 114th Congresses (discussed below). For more information, see CRS Report R43517, Recently Expired Charitable Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] and [author name scrubbed].
|
35.
|
For more information, see CRS Report RL34608, Tax Issues Relating to Charitable Contributions and Organizations, by [author name scrubbed] and [author name scrubbed].
|
36.
|
For more information on the provision allowing tax-free distributions from retirement accounts for charitable contributions, see CRS Report RS22766, Qualified Charitable Distributions from Individual Retirement Accounts: Features and Legislative History, by [author name scrubbed] and [author name scrubbed].
|
37.
|
For general background on energy tax policy, see CRS Report R43206, Energy Tax Policy: Issues in the 114th Congress, by [author name scrubbed] and [author name scrubbed] and CRS Report R41227, Energy Tax Policy: Historical Perspectives on and Current Status of Energy Tax Expenditures, by [author name scrubbed].
|
38.
|
For more information, see CRS Report R43453, The Renewable Electricity Production Tax Credit: In Brief, by [author name scrubbed]. The PTC was first enacted in 2002. When first enacted, the PTC was only available for wind and closed-loop biomass technologies. Over time, Congress has expanded the list of qualifying technologies.
|
39.
|
For more information, see CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by [author name scrubbed] and [author name scrubbed].
|
40.
|
U.S. Congress, Joint Committee on Taxation, A Report to the Congressional Budget Office of the Macroeconomic Effects of the "Tax Relief Extension Act of 2015," as Ordered to be Reported by the Senate Committee on Finance, committee print, 114th Cong., August 4, 2015, JCX-107-15.
|
41.
|
CBO provides this estimate to calculate their alternative fiscal scenario. CBO's baseline for spending and revenues assumes current law. Thus, revenue levels under CBO's baseline assume that all tax policies expire as scheduled. The alternative fiscal scenario assumes that current policies remain in place (i.e., expiring tax provisions are extended). The estimated revenues that would be raised from extending certain provisions might change depending on how provisions are stacked (i.e., interaction effects might cause revenue estimates for specific provisions to be higher or lower depending on what other provisions are also assumed to have been extended).
|
42.
|
For more on bonus depreciation in the context of tax extenders, see CRS Report R43432, Bonus Depreciation: Economic and Budgetary Issues, by [author name scrubbed].
|
43.
|
Extending these provisions would reduce revenues by $44.3 billion between 2016 and 2025, and increase outlays by $158.5 billion.
|
44.
|
For more information, see CRS Report RL31181, Research Tax Credit: Current Law and Policy Issues for the 114th Congress, by [author name scrubbed].
|
45.
|
In the Senate, the EXPIRE Act became an amendment to H.R. 3474, and a motion to end debate on H.R. 3474 was voted down on May 15, 2014.
|
46.
|
The Jobs for America Act (H.R. 4) contained the text of a number of previously passed House bills.
|
47.
|
For more information, see CRS Report RL32620, Health Coverage Tax Credit, by [author name scrubbed].
|
48.
|
For more information, see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A Summary of Federal Programs, by [author name scrubbed] et al., and CRS Report R43206, Energy Tax Policy: Issues in the 114th Congress, by [author name scrubbed] and [author name scrubbed].
|