December 2, 2014 / 4:00 PM / 3 years ago

Congress to push pause on 'extenders' tax breaks fight

Budget Committee Chairman Paul Ryan (R-WI) walks from a Republican caucus meeting at the Capitol in Washington August 1, 2014.Joshua Roberts

WASHINGTON (Reuters) - Suspending efforts to reshape dozens of special-interest U.S. tax breaks known as the "extenders," congressional Republicans on Tuesday said the measures would be renewed retroactively to Jan. 1 but only through the end of 2014.

In a move that sets up another round of debate over the extenders in 2015, senior Republicans said a short-term extension would be approved for the package, with the House of Representatives acting as soon as this week.

Often criticized as emblematic of a loophole-riddled tax code, the extenders affect corporate research, multinational tax avoidance strategies, teachers, commuters, green energy and dozens of other interests.

The Obama administration weighed in, with Treasury Secretary Jacob Lew meeting with congressional Democrats and saying in a statement that the White House was "open to supporting shorter-term alternatives" on the extenders.

At a cost of tens of billions of dollars to taxpayers, the 55-item extenders package includes some very narrow measures, such as tax breaks for NASCAR race tracks, Puerto Rican rum producers, racehorse owners and Hollywood studios.

House Republicans had been pushing to make some of the extenders permanent, chiefly tax breaks for corporations. Last week, Democrats brokered a compromise with Republicans, but that deal collapsed after President Barack Obama threatened a veto.

Last week's plan would have "given permanent breaks to a relative few, while costing more than $400 billion and leaving out critical provisions that help working families," said Democratic Senator Carl Levin, backing Obama's veto threat.

Next year Republicans will control the House of Representatives and the Senate, improving their chances on reshaping U.S. tax policy. The Republican who will soon become the House's top tax writer said at a conference the extenders would be renewed, but only through the end of the year.

"We're just going to do a clean, one-year deal," said Representative Paul Ryan, who will take over in January as chairman of the House's tax panel, the Ways and Means Committee.

Since their last authorized extension expired at the end of 2013, the extenders have been in limbo. The Internal Revenue Service has warned that failure to address the situation this year could delay tax return processing in 2015.

Businesses have clamored for months for more tax-planning certainty, pressuring Congress to act.

Republican Majority Leader Kevin McCarthy told reporters the House would approve a bill this week to renew the extenders.

Additional reporting by David Lawder and Jason Lange; Editing by Lisa Von Ahn

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