With negotiations intensifying on Capitol Hill, uncertainty remained over whether lawmakers would pass a major tax bill with permanent extensions benefiting both political parties, or simply opt for a two-year extension of existing tax breaks, the Associated Press reports.
The talks started before Thanksgiving in hopes of finding a middle ground between a two-year extension of the nearly 50 breaks approved earlier this year by the Senate Finance Committee and calls by House Republicans to make about a dozen breaks permanent.
Around 50 tax breaks for individuals and businesses expire annually, and Congress goes through a once-a-year ritual of renewing them.
According to the AP, President Barack Obama and Democrats are trying to make permanent tax credits of up to $1,000 per child that go to many lower- and middle-income families; tax credits up to $2,500 for college students; and earned income tax credits for low-income married couples and families with three or more children.
Republicans are seeking permanent extensions of business tax credits for research, expensing, and bonus depreciation, as well as those for charitable donations.
“Those programs are some of the most costly items on the extenders list but some Democrats have been willing to support making them permanent in exchange for saving some clean energy credits and expanding programs for low-income workers,” the Washington Post said.
The Committee for a Responsible Federal Budget, a watchdog group, estimates that an expanded extension of the research credit proposed by House Republicans would cost $180 billion over 10 years. The popular Section 179 business expensing provision could add another $70 billion over the same time period.
The total cost of the tax extenders package has been estimated at $700 billion or more over 10 years.
“There’s nothing pushing us apart,” House Ways and Means Committee Chairman Kevin Brady, a Texas Republican, said of the efforts to complete a deal. “So let’s stay at that until we get it done.”