Negotiations on an agreement to extend the payroll tax cut led to an impromptu discussion by lawmakers on February 2 about the necessity of extending certain expiring tax provisions as part of the pending conference agreement. Senate Finance Committee Chairman Max Baucus, D-Mont., agreed with other lawmakers regarding the effectiveness of allowing bonus depreciation for businesses that would lead to increased hiring by businesses. Baucus noted that the roughly 130 tax extenders that expire each year and/or 18 months were outside the scope of the conference committee, but he said companies are desperate for research and development credits, and families want educational credits for college expenses and deductibility of sales and income taxes. He called it an “embarrassment” that Congress lets these extenders expire each year.
House Ways and Means Chairman Dave Camp, R-Mich., who is chairing the conference, said that the tax extenders are outside the scope of the conference committee’s responsibility to extend payroll tax benefits, maintain payments for Medicare physicians and provide unemployment benefits. He said finding the offsets for the extenders would complicate the committee’s efforts. The lawmakers have until the end of February to reach an agreement before the current lower payroll tax rates expire.
Sen Jon Kyl, R-Ariz., noted that no one on the committee wants to put extension of the tax extenders ahead of extending the payroll tax holiday. However, several lawmakers noted that deciding how the payroll tax extension will be paid for will have a large effect on what the committee ultimately passes. Others noted that an agreement on bonus depreciation or the tax extenders could lead the way to a larger agreement on payroll taxes. At least three more meetings of the conference committee are likely.
By Stephen K. Cooper, CCH News Staff