WASHINGTON Dozens of temporary tax breaks, including big ones for business research, wind power and foreign profits, were renewed by the U.S. Senate late on Tuesday, putting to rest worries that further delays in dealing with the so-called tax extenders might foul up the approaching tax-filing season.
The Senate approved legislation sent from the House of Representatives that renews retroactively, back to Jan. 1, 2014, a 55-item package of tax breaks. Most of them expired at the end of 2013 and have since been in limbo.
The legislation, which passed the Senate 76-16, will be sent to President Barack Obama for signing into law.
In a floor speech before passage, Senate Finance Committee Chairman Ron Wyden said: “With this tax bill, the Congress is turning in its tax homework 11 months late...this package of tax incentives will last just two weeks before families and businesses are thrown back into the dark with respect to the taxes they owe. The legislation accomplishes nothing for 2015.”
In calling on Congress to provide greater certainty for taxpayers next year, Wyden added, "The Congress is about to pass a tax bill that doesn’t have the shelf life of a carton of eggs.”
Nevertheless, not just big businesses, but ordinary Americans are affected by extender provisions for items such as state and local sales tax, canceled mortgage debt, college tuition, schoolteacher supplies and health insurance.
The measure would be good through the end of this year. If Obama signs it, that would mean taxpayers could claim the tax breaks for the 2014 tax year, but Congress would have to debate them all over again in 2015.
The bill was projected to cost U.S. taxpayers $41.6 billion over 10 years. No new federal revenue sources were dedicated to fully offsetting that cost, which means it would increase the federal budget deficit.
The extenders usually win short-term renewal and extension from Congress every year or two.
Nearly half of the total 10-year estimated cost comes from the three largest items: a $7.6 billion credit for business research and development costs; a $6.4 billion tax break for renewable energy production plants; and a $5.1 billion tax exception that allows financial firms and other businesses to defer U.S. taxes on certain foreign profits.
Another tax break, known as bonus depreciation, allows businesses to write off and deduct capital investments more quickly at an estimated 10-year cost of $1.5 billion.
(Editing by Peter Cooney and Lisa Shumaker)