Tax cuts near?: Lawmakers Tax Deal
Published: December 6, 2015
Tax cuts near?: Lawmakers Tax Deal, Republican and Democratic negotiators closed in Friday on a major package of tax cuts for businesses and individuals that could exceed $700 billion in forgone revenues over a decade, and planned to work through the weekend in hopes that Congress can approve it before quitting for the year.
The package would extend or make permanent around 50 temporary tax breaks that have expired or will soon lapse. By combining business breaks that are priorities of Republicans with tax credits for lower-income workers and families that are critical to Democrats, negotiators are seeking a balanced package that could transcend the partisanship that often paralyzes Congress.
Among its most significant parts, the proposed deal on the so-called tax extenders would make permanent a tax credit for corporations’ research and development expenses that dates to 1981. That credit has been extended more than a dozen times, but for no more than a year or two – largely to minimize the official price tag of its extension. A popular write-off for small businesses’ major purchases also would be made permanent.
President Obama and Democrats in Congress have demanded in return that the tax package make permanent three provisions that were among the president’s first-term economic stimulus measures: an expanded earned-income tax credit for low-wage workers, an expanded child tax credit and a credit for four-year college costs.
“I sense a real appetite for a balanced deal that incorporates priorities the Democrats have, priorities that Republicans have, that will provide a measure of certainty and predictability to the economy, and provide growth and the ability for working families to get ahead,” Senator Ron Wyden of Oregon, the senior Democrat on the tax-writing Senate Finance Committee, said in an interview on Friday.
“All sides agree that this has to be a multiyear bill,” Mr. Wyden added, to give more predictability to businesses and individual taxpayers.
But a multiyear measure making a number of tax breaks permanent would also raise the cost of the legislation. The research and development credit, the single costliest business item, would reduce revenues by about $110 billion over the first decade.
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