(continued on pg. 116)
With Comprehensive Tax
Reform Unlikely, Focus Shifts
to Expired Incentives
By Ben Gann, director of legislative affairs & grassroots activities, NLBMDA
At the start of 2013, Congress appeared
well-positioned to pass comprehensive
tax reform for the first time since 1986.
It had just narrowly avoided the fiscal
cliff, and there was growing concern
that the current tax code had become
overly complex, thereby reducing
America’s economic competitiveness.
Efforts for comprehensive reform
were bolstered when Sen. Max Baucus
(D-MT) and Rep. Dave Camp (R-MI),
the chief tax writers in the Senate and
House of Representatives, respectively,
announced they were working
together on rewriting the tax code.
Last summer, the two men
toured the country to hear concerns
from businesses and convince them
of the need to reform the tax code.
For his part, President Obama was
cool to the idea of comprehensive
reform, but signaled a willingness to
lower the corporate income tax rate,
which is currently the highest among
industrialized nations.
Sen. Baucus and Rep. Camp
were so committed to comprehensive
reform last year that they rejected
requests to also work on a “tax
extenders” bill renewing dozens of
incentives expiring at the end of 2013.
Baucus released an energy tax reform
plan in December 2013; however,
the same day the energy tax reform
proposal was released the White
House announced it was appointing
him Ambassador to China, a move that
effectively ended comprehensive tax
reform efforts in the Senate.
Rep. Camp worked all of last
year with House Republicans to
reach consensus on a comprehensive
tax reform draft. In February, Camp
released a proposal to broaden the tax
base that included several controversial
provisions. They included repealing
the last-in, first-out (LIFO) accounting
rules and reducing the current $1
million principal cap for the mortgage
interest deduction. The plan was dead
almost immediately after Speaker
of the House John Boehner (R-OH)
declined to endorse it.
Attention Turns to Tax Extenders
New Finance Committee Chair, Sen.
Ron Wyden (D-OR), has moved quickly
in advancing a tax extenders bill
in the Senate. In April, the Finance
Committee approved renewing many
of the tax provisions that have expired,
or will expire at the end of this year,
through 2015. The bill, entitled the
Expiring Provisions Improvement
Reform and Efficiency (EXPIRE) Act, is
meant to be a bridge to comprehensive
tax reform.
“This will be the last tax extenders
bill the committee takes up as long
as I’m chairman,” said Sen. Wyden at
committee markup of the legislation.
“That’s why the bill is called the
EXPIRE Act. It is meant to expire.”
The legislation includes tax
incentives of interest to lumber
and building material dealers
such as the tax credit for energy
efficient improvements to existing
homes (25C), tax credit for energy
efficient improvements to new
homes (45L), deduction for energy
efficient improvements to public
and commercial buildings (179D),
accelerated bonus depreciation
for capital investments (bonus
depreciation), and enhanced first-
year depreciation write-offs for small
businesses (Section 179 depreciation
In May, the EXPIRE Act was
brought to the floor in the Senate
but failed 53 – 40 and did not
garner the 60 votes needed to move
forward with its consideration. It
is unlikely the Senate will take up
the legislation again until after the
November elections. Sen. Mark Kirk
(R-IL), who sponsored the bill used as
the legislative vehicle for the Senate
tax extenders package, was the only
Republican to vote with Democrats on
the motion.
There is bipartisan support for a
tax extenders package in the Senate;
however, many Republicans remain
opposed to the legislation because
Majority Leader Harry Reid (D-NV)
has blocked them from offering
amendments to the bill. Sen. Reid
and Minority Leader Mitch McConnell
(R-KY) are blaming each other for the
Rep. Camp and the House Ways
and Means Committee have pivoted
from comprehensive reform and
started consideration of some expired
tax incentives. In May, the committee
approved making six expired tax
provisions permanent, including
increasing the limits for Section 179
depreciation deduction up to $800,000
and indexing it for inflation. The
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