Overview - Tax Reform currently sidelined; focus on Tax Extenders: On Capitol Hill, tax reform is currently sidelined until 2015, with the current focus on whether to extend more than 50 provisions that expired at the end of 2013 -- the so-called "tax extenders." We expect tax extenders to be addressed in the 2014 post-election "lame duck" session or in early 2015, with a resumption of tax reform efforts to follow.
The scope of "tax extenders" is currently unclear, with the Senate Finance Committee having passed a bill that extends most expired provisions for two years, while the House has instead passed permanent extensions for a limited number of expired provisions.
NEWS and KEY PUBLICATIONS
July 15, 2014: House Approves bill temporarily continuing highway funding.
February 26, 2014: House Ways and Means Committee releases comprehensive tax reform plan.
November 18 - 21, 2013: Senate Finance Committee releases discussion drafts on reform of business taxes:
November 13, 2013: The nonpartisan Congressional Budget Office (CBO) released their updated deficit reduction options book laying out 103 ways Congress and the Administration could cut spending or raise revenues to reduce projected deficits.
August 21, 2013: With impending mark-ups this fall of tax reform legislation, the Committee for a Responsible Federal Budget has begun a series analyzing the $1.3 trillion of tax expenditures (credits, deductions, exclusions and other preferences). Link here.
Joint Committee on Taxation study estimates that eliminating the AMT and reducing top individual and corporate income tax rates to 25 percent, as proposed in the House-passed budget resolution, would cut revenues and increase defcits by $5 trillion unless offset by eliminating deductions, credits and other tax preferences. Link to estimates on individual rates. Link to estimates on corporate rates.
July 25, 2013: As reported by Bloomberg/BNA, Senate Majority Leader Reid says that legislation to rewrite the tax code should raise at least $975 billion in revenue.
June 27, 2013: Tax provisions expiring in 2013 include: the deduction for state and local taxes, the R&D tax credit; the work opportunity tax credit; enhanced expensing for small businesses; the renewable energy production tax credit; and the tax deduction for energy-efficient commercial buildings. CRS Report detailing expiring provisions.
March 2013: GAO report on corporate tax expenditures
February 25, 2013: JCT: General Explanation of Tax Legislation Enacted in the 112th Congress
February 13, 2013: Ways & Means Committee announces tax reform working groups
February 12, 2013: In State of the Union address, President Obama endorses tax reform as part of deficit reduction.
February 1, 2013: JCT releases estimates of Federal Tax Expenditures
January 14, 2013: Updated IRS tax tables for 2013
January 11, 2013: JCT releases list of expiring tax provisions
September 11, 2012: Senate Finance Committee releases updated summary of tax extenders bill.
August 22, 2012: CBO releases updated revenue projections
August 14, 2012: "Section 179 and Bonus Depreciation"
August 14, 2012: "Research Tax Credit: Current Law and Policy Issues"
August 10, 2012: Washington Post, "Tax Reform is Going to be Really, Really Hard"
August 2, 2012: House passes HR 6169, a bill to establish an expedited procedure for consideration of tax reform in 2013. To qualify for the expedited process, legislation would have to reduce tax brackets down to two; reduce the corporate rate to at least 20 percent; repeal the AMT; maintain revenues at 18 or 19% of GDP; and move to a territorial tax system. However, the expedited procedures would provide fewer protections than a filibuster-proof budget reconciliation measure. The Senate will not consider the House-passed bill.
August 2, 2012: Senate Finance Committee approves a two-year AMT (Alternative Minimum Tax) patch and tax extenders package (R&E tax credit, deduction for state sales taxes and other expiring provisions.). However, the measure fails to address the fiscal cliff (major tax hikes in early January 2013 when the Bush tax cuts expire). The package costs $205 billion over 10 years, the bulk of which is from the AMT patch. Outlook: Senate could vote on the package in September, but the House has not scheduled action on extenders and, as reported by Congressional Quarterly, may wait until consideration of the larger tax issues after the election.
Documents related to the tax extenders bill JCT Revenue Estimates
CRS Summary of Tax Provisions Expiring in 2012 including the expiring "Bush tax cuts"
August 1, 2012: House passes a one-year extension of Bush tax cuts after rejecting a Democratic proposal to let the cuts expire for individuals earning up to $200k and joint filers earning up to $250k. (The Senate rejected the House approach the previous week.) Summary of the House-passed bill
July 25, 2012: Senate passes legislation (S. 3412) to extend for one year the Bush tax cuts on income up to $200k for individuals and $250k for joint filers, after defeating a Republican alternative to extend the cuts for all income levels. (The House later rejected the Senate approach on August 1.) Statement of Administration Policy on Senate bill
July 30, 2012: Comparison of bills to Extend the Bush Tax Cuts
July 25, 2012: "Moving to a Territorial Income Tax: Options and Challenges"
July 18, 2012: "The 2001 and 2003 Bush Tax Cuts and Deficit Reduction" The report estimates that extendng the Bush tax cuts for single filers over $200k and joint filers over $250k would cost $34 billion in 2013 and $931 billion over 10 years (2013-22).
April 17, 2012: "Tax Provisions Expiring in 2012"
March 28, 2012: "Energy Tax Policy Issues in the 112th Congress"
December 16, 2011: "Corporate Tax Reform: Issues for Congress"
July 13, 2011: Tax Policy Options for Deficit Reduction
November 10, 2009: "Economic Stimulus: Issues and Policies" analyzing the impact of tax cuts on the economy.