WASHINGTON -- The House of Representatives voted Wednesday to temporarily extend a package of expired tax breaks through the end of the year, moving to avoid a potential tax increase for people including schoolteachers, families of college students, taxpayers in states that have no income taxes and NASCAR racetrack operators.
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The bill would enable millions of businesses and individuals to claim the tax breaks on their 2014 returns. The bill would add nearly $42 billion to the budget deficit over the next decade.
The House vote of 378-46 set the stage for a vote in the Senate, likely next week. Of the four Republican representatives from Arkansas, Rick Crawford, Tim Griffin and Steve Womack voted in favor of the bill, while Tom Cotton opposed it.
Technically, the bill is a one-year, retroactive extension of the tax breaks, even though they last only through the end of this month. Senate Finance Committee Chairman Ron Wyden, D-Ore., threw in the towel Wednesday night in his effort to get a two-year extension.
The chairman for the tax-writing Ways and Means Committee suggested that the short-term extension was necessary but not ideal.
"Here we are at the end of 2014 retroactively putting in policies for the whole year," said Rep. Dave Camp, R-Mich.
"The bill is hardly perfect but provides us with a sorely needed stopgap measure," said Rep. Louise Slaughter, D-N.Y.
Wednesday's vote to restore more than four dozen expired provisions sets the stage for a broader and potentially more complicated tax debate in 2015. Republicans will control both chambers of Congress and may discuss these soon-to-be-expired tax provisions as part of a broader revamp of the corporate tax code.
Absent any agreement by Congress and the president, millions of Americans face tax increases when preparing their 2014 tax returns early next year. Some of the tax deductions that hang in the balance are:
• Itemized deductions for state and local general sales taxes paid by taxpayers in seven states where they don't have local income taxes to deduct from their federal taxable income: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
• A $4,000 deduction of higher-education expenses for middle-income Americans.
• A $250 deduction for elementary and secondary schoolteachers for school supplies.
• A tax deduction for companies, farms and restaurants that donate food to charities.
• The three-year tax depreciation for racehorses.
• A tax write-off for the first $15 million spent on film and television production.
• The seven-year depreciation for land improvements and support facilities at motor-sports complexes.
Other breaks for businesses include 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 tax credit for using wind farms and other renewable energy sources to produce electricity.
Other provisions benefit commuters who use public transportation and keep struggling homeowners whose mortgages are reduced from paying income taxes on the amount of debt that was forgiven.
Until the House and the Senate reach a final accord, these tax provisions remain in play. But congressional leaders and staff members from both parties insisted that at minimum an extension covering 2014 would get done next week.
President Barack Obama signaled that he would sign the temporary extensions.
"We are open to short-term extensions of these provisions," Obama said Wednesday in a meeting with members of the Business Roundtable, a business group.
The president added that he'd like to see some of the tax extensions codified in a broader comprehensive revamp of corporate taxes.
"There is definitely a deal to be done," Obama said.
Bipartisan talks between the two chambers of Congress appeared to be moving toward a two-year deal before Thanksgiving.
But the effort fell apart when Obama said he would veto it because it too heavily favored big corporations over families.
Some Democrats said they also opposed the package 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.
Later in the day, the White House expanded on its decision to scuttle last week's tax deal.
"What the American people want is ... somebody that's looking out for working people," spokesman Josh Earnest said.
"That's why we weighed in so heavily on the original tax extenders proposal. And ... it's the criteria that we'll use to evaluate both the budget, but also, you know, future tax proposals that may be coming from Congress."
While the House action gave many taxpayers a reprieve, some people saw it as a missed opportunity.
"Congress should be pursuing comprehensive tax reform that would update the tax code, enhance competitiveness, grow the economy and reduce the deficit," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
"The excuse that there is not enough time rings hollow given that this deadline has been well-known for years, and this exercise of ad hoc legislating has become an embarrassing and damaging standard practice."
And some Democrats were unhappy that the vote Wednesday left 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," Wyden said. "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.
Some lawmakers blamed the lack of a broader tax deal on Obama's recent executive order on immigration, saying it minimized chances for any real tax action before the 2016 presidential elections.
"The ability to find common ground on contentious issues in the short term has been lost by the immigration action," said Sen. Lindsey Graham, R-S.C.
"I don't see a big deal being done with President Obama. I just don't see anything big where you reform entitlements and clean up the tax code. ... So for the next two years it's about incremental steps."
Information for this article was contributed by Kevin G. Hall, William Douglas, Lesley Clark and Anita Kumar of Tribune News Service; and by Stephen Ohlemacher of The Associated Press.
A Section on 12/04/2014