On Tuesday July 21, the Senate Finance Committee approved a $95 billion package of more than 50 tax extenders, which are generally narrow interest tax expenditures (breaks) that are only authorized for a year or two.

While the Senators discussed many possible changes to the extenders package, Chairman Orrin Hatch (R-UT) discouraged votes on any contentious amendments that would prevent the bill from passing committee. Therefore, only two amendments were officially offered: one by Sen. Stabenow (D-MI) to adjust a tax credit for mortgage forgiveness, and one by Sen. Grassley (R-IA) to create a production tax credit (PTC) for biodiesel. Both amendments were agreed to.

The rest of the discussion focused on the need for comprehensive, long-term tax reform, with Senators like Rob Portman (R-OH) acknowledging that renewing supposedly “temporary” provisions again and again is not the right way to enact tax policy. Some Senators suggested making many of these extenders permanent, such as those for research and development, while others lamented that some of the provisions, like bonus depreciation, were a reaction to the 2008 economic recession and are not consistent with the idea of real tax reform.

There was also debate about energy production and investment tax credits in the package, with Senators Toomey (R-PA) and Coats (R-IN) expressing vehement opposition to the production tax credit for wind energy, arguing that it is a huge cost for taxpayers and should be eliminated altogether. Senator Cantwell (D-WA) added that the oil and gas industry also receives billions in tax credits every year.

If Congress is serious about enacting real, comprehensive tax reform, they should have rejected the whole package. If these provisions are worthy, they should be included in the tax code; if not, they should be eliminated. Extending a provision for two years five times costs the same as a ten year provision, but in Congressional budget scoring, a two year extension is costed out as just a two year extension, hiding the true cost of provisions that are likely to get extended again. Tax extenders are another budget gimmick that needs to end.

To read the Committee’s summary of the package, click HERE.

To learn more about tax reform and tax extenders, click HERE.