Senate Finance Committee Passes $85 Billion Tax Extenders Bill

April 04, 2014

The Senate Finance Committee passed a tax extenders package that includes extensions of two years or longer on over 50 provisions totaling $85.3 billion.

The package contains provisions dealing with individuals and businesses, as well as many targeted at the renewable energy industry. Some of the largest include $15.4 billion for the research and development tax credit, $13.35 billion for section 45 and 48 renewable energy, $10.4 billion for active financing, and $6.4 billion for the state and local general sales tax deduction. 

The originally proposed package – the Chairman’s Mark – was released on Tuesday and included a two year extension on 45 provisions totaling $67.4 billion.

The final bill passed by the committee contained multiple modifications and additions as well as three revenue raising provisions, extending almost all the provisions in current law for 2013. In total, these changes added an additional $17.9 billion to the bill.

We’ve written in the past that not all tax extenders are worth extending, and that still holds true. Ideally, the tax code would be neutral and only include provisions that help mitigate the biases in the current tax code against saving and investment. This includes provisions that deal with cost recovery, such as the small business expensing provision and bonus depreciation. These provisions help move us closer to correctly defined business income.

See the table below for a list of the provisions include in the bill passed by the Senate Finance Committee.

2014 Tax Extenders Proposed by Senate Finance Committee

Source: Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act

Note: Some provisions extended for two years; others extended permanently. See here for list.

     

Individual Provisions

In Millions

 

Deduction for expenses of elementary and secondary school teachers

$430

 

Mortgage Debt Relief

$5,400

 

Parity for employer-provided mass transit and parking benefits

$180

 

Deduction for mortgage interest premiums

$1,800

 

Deduction for state and local general sales taxes

$6,500

 

Above-the-line deduction for higher education expenses

$596

 

Tax-free distributions from individual retirement plan for charitable purposes

$1,800

 

Special rules for contributions of capital gain real property made for conservation purposes

$268

 

Subtotal

$16,974

     

Business Provisions

 
 

Research and experimentation tax credit

$15,400

 

4% Credit Rate Freeze for the Low-Income Housing Tax Credit Program

$49

 

Treatment of military basic housing allowances under low-income housing credit

$49

 

Indian employment tax credit

$124

 

New Markets Tax Credit

$1,800

 

Credit for railroad track maintenance

$414

 

Mine rescue team training credit

$5

 

Employer wage credit for activated military reservists

$274

 

Work Opportunity Tax Credit

$3,160

 

Qualified zone academy bonds (QZABs)

$284

 

Three-year depreciation for racehorses

$9

 

15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements

$4,800

 

Accelerated depreciation for business property on Indian reservation

$158

 

Enhanced charitable deduction for contributions of food inventory

$292

 

Bonus depreciation

$2,850

 

Acceleration of AMT credits in lieu of bonus depreciation

$602

 

Temporarily extend increase in the maximum amount and phase-out threshold under section 179

$3,100

 

Election to expense advanced mine safety equipment

**

 

Deduction for domestic production activities in Puerto Rico

$222

 

Modification of tax treatment of certain payments to controlling exempt organizations

$36

 

Treatment of certain dividends of regulated investment companies (RIC's)

$198

 

Definition of RICs as qualified investment entities under FIRPTA

$93

 

Exceptions under subpart F for active financing income

$10,400

 

Special rules for qualified small business stock

$1,950

 

Basis adjustment to stock of S corporations making charitable contributions of property

$104

 

Reduction in S corporation recognition period for built-in gains tax

$232

 

Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands

$336

 

American Samoa economic development credit

$29

 

Multiemployer Pension Plan Funding Rules

**

 

7-year recovery period for motorsports entertainment complexes

$71

 

Special rules for certain film and television productions

$27

 

Look-through treatment

$2,450

 

Subtotal

$49,518

     

Energy Provisions

 
 

Plug-in Electric Motorcycles and Highway Vehicles

$2

 

Credit for alternative fuel vehicle refueling property (including hydrogen property)

$89

 

Cellulosic Biofuels Producer Tax Credit

$55

 

Incentives for biodiesel and renewable diesel

$2,600

 

Indian country coal production tax credit

$76

 

Credit for construction of new energy efficient homes

$612

 

Cellulosic Biofuels Bonus Depreciation

$1

 

Incentives for alternative fuel and alternative fuel mixtures (including liquefied hydrogen)

$903

 

Credit for fuel cell motor vehicles

$47

 

Credit for nonbusiness energy property

$1,650

 

Section 45 and 48 renewables

$13,350

 

Energy efficient commercial buildings deduction

$304

 

Subtotal

$19,689

     

Revenue Raisers

 
 

Extend paid preparer EIC due diligence requirements to the child tax credit

-$43

 

Increase levy authority on payments to Medicare providers with delinquent tax debt

-$818

 

 Exclusion from gross income of certain clean coal power grants

-$4

 

Subtotal

-$865

     

Total

$85,316

**Estimate pending or no revenue impact.

 

Update: This post was updated to reflect the fact that some provisions are extended for two years, while others are extended permanently.

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