WASHINGTON — The House may vote
The bill — the Tax Increase Prevention Act of 2014 or H.R. 5771 — was introduced by House Ways and Means Committee Chairman Dave Camp, R-Mich., on Monday. It is expected to move to the House floor later this week. The legislation generally extends to the end of 2014 tax provisions known as "extenders" that expired at the end of 2013.
The bill was introduced after President Obama threatened last week to veto a potential agreement that would have made some extenders permanent and renewed others for two years. The Senate Finance Committee earlier this year approved a bill that would extend many extenders through 2015, but that legislation never passed the full Senate.
The Joint Committee on Taxation estimated that H.R. 5771 would reduce revenues by $44.7 billion from fiscal 2015 through fiscal 2024, according to a summary of the bill from the Ways and Means Committee.
The summary states that by enacting the bill, "Congress can continue to pursue its efforts to make certain expiring tax provisions permanent to provide certainty and stability to families and businesses, without causing disruption for taxpayers trying to file their 2014 tax returns."
The top Democrat on the House Ways and Means Committee, Rep. Sander Levin of Michigan, said in a release that he prefers the one-year bill over the proposal to make some extenders permanent.
"I actively and publicly opposed last week's proposal that would have given permanent tax breaks to a relative few, while costing more than $400 billion and leaving out critical provisions that help working families. This one-year extension avoids that damaging proposal," he said.
But Senate Finance Committee Chairman Ron Wyden, D-Ore., has concerns with the House bill and the fact that it lacks support for working families, a committee spokeswoman said. The top Republican on the Finance Committee, Sen. Orrin Hatch of Utah, expressed disappointment with Obama's veto threat.
"We've gone from being the on cusp of a deal — a deal that both sides could reasonably support — to a situation where probably our only recourse will be to pass a one-year retroactive extension of all tax extenders," Hatch commented. "My hope going into this exercise was that we could bring more permanency for American businesses and taxpayers. Sadly, because of the President and the more liberal Democrats in the Senate refused to take yes for an answer, such a deal seems unlikely at this point.
One thing Camp's bill would do is provide a $400 million national volume cap for qualified zone academy bonds in 2014. QZABs are tax-credit bonds that can be issued to finance renovations, equipment, teacher training and course materials at qualified zone academies, which are public schools or academic programs in them that meet certain requirements. The national cap is allocated to states, which can carry forward unused volume for up to two years.
Under federal tax law, QZAB issuers have to certify that private entities will contribute property or services to the school with a value of at least 10% of the QZAB proceeds. The bill passed by the Senate Finance Committee earlier this year would lower the minimum to 5%, but H.R. 5771 would not do that.
The bill introduced by Camp also would extend through 2014 the deduction for state and local general sales taxes, which taxpayers can take in lieu of a deduction for state and local income taxes. This deduction is especially important for the states that don't have income taxes.
Another provision in the legislation would extend empowerment zone designations through the end of 2014. Empowerment zones are economically distressed areas, and by extending the designations, these communities would remain eligible for tax incentives including empowerment zone facility bonds. Issuers would only be able to issue the bonds if the empowerment zones have remaining volume cap.
In addition, the bill would provide one-year extensions for two tax provisions related to Puerto Rico: One would extend the temporary increase in the limit on the payment of rum excise tax revenues to Puerto Rico and the U.S. Virgin Islands. It would extend the additional $2.75 per proof gallon that the territories can receive, increasing the grant from $10.50 to $13.25.
The other Puerto Rico-related provision would extend the ability for domestic gross receipts from the commonwealth to be deducted under the domestic production deduction.
