The bipartisan budget deal Congress is mulling would implement $17 billion in retroactive, temporary tax breaks that are separate from the $1.5 trillion net tax cut signed by President Trump in December.
In addition to hundreds of billions of dollars in new spending, the deal also would revive a raft of 30-plus temporary tax breaks commonly known as “extenders,” ranging from breaks for rum production in Puerto Rico and the Virgin Islands to those for racehorses.
Most of the cuts expired in 2016 and would be renewed for 2017, meaning that they would be expired again even after being extended.
The Joint Committee on Taxation, Congress’ tax experts, estimated Thursday that the cuts would cost just under $17 billion altogether. The budget package also includes about half a billion dollars' worth of tax relief for people who suffered losses because of California wildfires or the hurricanes that struck southern states.
The tax extenders are ones that failed to make the cut in 2015 when both parties voted to make permanent many of the temporary tax breaks that had been re-upped many times over the years.
As a result, they are opposed by some conservatives, who view them as bad policy or corporate giveaways.
Freedom Partners, the free-market group backed by the Koch brothers, dismissed the breaks Thursday in a statement as “corporate welfare,” saying they should not be enacted in the wake of a tax overhaul meant to simplify the code.
Many congressional Republicans share the view that the remaining extenders should be allowed to expire. Nevertheless, the industries or businesses affected by the specific breaks are influential enough in Congress to guarantee that the cuts have support.
“We have worked to address member priorities to extend certain provisions,” Utah Sen. Orrin Hatch, the chairman of the Senate Finance Committee, said Thursday on the Senate floor.
Not all of the breaks benefit a specific sector or were part of the larger package of extenders that was extended year after year prior to 2015.
For example, one measure would shield universities with small numbers of tuition-paying students from the endowment excise tax imposed by the new GOP tax law, a provision that would appear to exempt Kentucky’s Berea College. Another provision would turn all low-income communities in Puerto Rico into “opportunity zones,” providing tax cuts for businesses that invest there.