The Senate passed a one-year extension of a package of expired tax breaks Tuesday evening, wrapping up a year of failed negotiations with a punt.
The vote will retroactively extend through the end of 2014 nearly 50 temporary business and individual tax breaks that expired at the end of 2013, at a cost of $41 billion. Following the upper chamber’s 76-16 vote, the bill now proceeds to President Obama’s desk.
Although approving the provisions known as tax “extenders” will provide relief for businesses and families filing their taxes early next year, senators made clear that they were frustrated with the outcome. Lawmakers had tried to strike a bargain on making some provisions permanent, but those negotiations broke down over disagreements on procedure, partisanship and a veto threat from Obama.
“Retroactive tax bills like the one before the Senate tonight may satisfy Congress, but they leave workers, families and businesses wanting,” said Senate Finance Committee Chairman Ron Wyden, who voted against the bill.
The Oregon Democrat, a strong proponent of comprehensive tax reform, had worked at the committee level to pass a two-year reauthorization of extenders, and then later in the lame-duck session to trade some permanent features favored by Democrats for ones liked by Republicans.
That second effort fell apart when the White House caught wind of the deal and issued a veto threat on the grounds it wouldn’t do enough for lower-income families and would widen the deficit.
Obama “pulled the plug on a bipartisan negotiation that would have produced a more satisfying result,” said Sen. Orrin Hatch of Utah in a floor speech. Hatch, the ranking Republican on the Senate Finance Committee, will take the gavel from Wyden in January.
With just two weeks left in the year, the bill “is quite literally the best we can do, and at this point something we must do,” Hatch said.
The clock will reset on the tax extenders on Jan. 1, when they expire again. That means businesses will get credit for investments already made throughout 2014 and that Congress will wrangle over the multitude of expired provisions all over again with a GOP majority in the Senate.
The tax breaks that passed the Senate Tuesday include a range of provisions large and small aimed at businesses, individuals and activities.
The breaks for businesses include a credit for research expenses and a provision that allows them to more quickly deduct part of their expenses for software and equipment, as well as smaller breaks like one for building racetracks.
On the individual side, the package includes a deduction for teachers’ classroom expenses, an exclusion for mortgage forgiveness and other breaks.
The package also includes energy provisions, including more than $6 billion in credits for wind farms that are opposed by conservatives.
