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House plans to extend tax breaks through December
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WASHINGTON (AP) — The House is moving Wednesday to extend a massive package of expired tax breaks through the end of the year, adding about $45 billion to the budget deficit over the next decade.

The bill would enable millions of businesses and individuals to claim the tax breaks on their 2014 returns. But beyond Dec. 31, their fate would be uncertain.

The more than 50 tax breaks benefit big corporations and small businesses, as well as commuters, teachers and people who live in states without a state income tax. More narrow provisions include tax breaks for film and theater producers, NASCAR racetracks, racehorse owners and expenses related to railroad track maintenance.

In all, the tax breaks affect about one in six taxpayers, according to The Tax Institute, the independent research arm at tax giant H&R Block.

The House is expected to pass the package Wednesday and send it to the Senate. Senate Democratic leaders were noncommittal about whether they would accept the bill or try to change it.

Time is short because the House plans to adjourn for the year next week, and the Senate could as well.

"Let's see what they send us," said Senate Majority Leader Harry Reid, D-Nev., "and we'll make a decision then."

Congress routinely extends the package of tax breaks every year or two. But they were allowed to expire in January.

Technically, the bill is a one-year, retroactive extension of the tax breaks, even though it only lasts through the end of the month.

Advocates and lawmakers from both political parties said the short-term measure is the product of a divided Congress that has trouble passing routine legislation.

"It's just unworthy of the world's greatest economy to have a tax code for two weeks," said former Michigan Gov. John Engler, who is now president of the Business Roundtable, an association of corporate CEOs.

House Republicans and Senate Democrats were negotiating to make some of the tax breaks permanent. But talks faltered last week after the White House threatened to veto an emerging package, saying it too heavily favored big corporations over families.

"The president killed it. Period," said House Speaker John Boehner, R-Ohio.

Some Democrats said they opposed the package the White House threatened to veto because it would have added more than $400 billion to the budget deficit over the next decade, yet still would have allowed several tax breaks that benefit low-income families to expire in a few years.

"This one-year extension avoids that damaging plan," said Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee.

Some Republicans in Congress argue it is OK to add to the budget deficit, when all you are doing is extending tax breaks that taxpayers currently enjoy. They note that many Democrats have supported the practice in the past.

On Tuesday, Treasury Secretary Jacob Lew told House Democrats the administration was open to supporting a shorter-term plan.

Among the biggest breaks for businesses are a tax credit for research and development, an exemption that allows financial companies such as banks and investment firms to shield foreign profits from being taxed by the U.S. and several provisions that allow businesses to write off capital investments more quickly.

There is also a generous tax credit for using wind farms and other renewable energy sources to produce electricity.

The biggest tax break for individuals allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns. Another protects struggling homeowners who get their mortgages reduced from paying income taxes on the amount of debt that was forgiven.

Other provisions benefit commuters who use public transportation and teachers who spend their own money on classroom supplies.

Some Democrats are unhappy the package leaves out two provisions: a tax credit that helps some laid-off workers pay for health insurance, and a tax credit for buying electric motorcycles.

"The House proposal on a number of important particulars really clobbers working-class families," said Sen. Ron Wyden D-Ore., chairman of the Senate Finance Committee. "For example, the health care tax credit is particularly important to people who may have been laid off."

Wyden is also a champion of the tax credit for electric motorcycles, which helps Oregon-based Brammo, a maker of electric motorcycles.

"First of all, I think that's anti-innovation," Wyden said of the omission. "The reality is that this is an opportunity to keep an industry in the United States rather than having it go overseas."

The credit for electric motorcycles was left out because of "an oversight," said Rep. Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee.

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