WASHINGTON — One of the goals of House Republican leaders is to pass a bill before the August recess that would extend expired and expiring tax provisions, some of which are muni related, as well as the 2001 and 2003 Bush tax cuts, House Ways and Means Committee member Rep. Aaron Schock, R-Ill., said Thursday morning.
Speaking at an event sponsored by The Hill, Schock said he has been pushing for swift action for a one-year extension of expired and expiring tax provisions and a one-year extension of the Bush cuts to the top income tax rates. There is a consensus among House Republicans to vote to extend them before the August recess, he said.
Schock’s remarks were more specific than those made by House Speaker John Boehner, R-Ohio. on Wednesday when he said the House will vote on the so-called extenders before the November election.
Republicans have been holding educational meetings in House Majority Whip Kevin McCarthy’s, R-Calif., office to bring members up to speed on tax reform and to discuss how to tackle the slew of expired and expiring tax provisions, Schock said.
“My fear is that if we wait until after the election to take action on this, you’re going to have huge sell-offs in the market and capital gains rates could in fact go up after November,” he said. “It’s dangerous to wait for the six weeks of lame duck to deal with a huge potential tax increase at a time in our economy when we don’t need that kind of uncertainty floating out there.”
Roughly $500 billion of tax increases would go into effect on Jan. 1, 2013 — dubbed “taxmaggedon” — if Congress doesn’t extend the Bush tax cuts, the patch to the alternative minimum tax, the capital gains tax cut, and other provisions, according to the Heritage Foundation.
To further complicate matters, the current federal debt ceiling limit of $16.394 trillion is expected to be reached after the November election, Matthew Rutherford, President Obama’s nominee for Treasury assistant secretary for financial markets, told the Senate Finance Committee earlier this week.
In addition, the $1.2 trillion in automatic spending cuts enacted last year by Congress will also begin to take effect early next year.
Susan Gaffney, director of the Government Finance Officers Association’s federal liaison center, said the GFOA would like to see the state and local sales tax deduction extended, as well as several expired muni bond provisions that were in the American Recovery and Reinvestment Act of 2009.
House Ways and Means Committee ranking minority member Rep. Sander Levin, D-Mich., would also like to see several bond provisions from the ARRA extended, including the AMT exemption for private-activity bonds, the $30 million annual issuer limit for bank qualified tax-exempt bonds, and Build America Bonds. He also wants an extension of a provision that allowed federal home loan banks to guarantee tax-exempt bonds under the Housing and Economic Recovery Act, according to congressional aides.
Most Republicans have condemned the 2009 stimulus package as a failure and have said BABs would be dead on arrival.
Schock also said that all tax expenditures should be on the table for tax reform, but expressed sympathy for the ongoing financial woes of states and localities.
“There is no free money in the economy so when we create some deductions for a specific product, in this case municipal bonds, it has a direct correlation to the cost of that product,” Schock said when asked about the exclusions for tax-exemption.
“We have to be careful, especially at a time when many states are running deficits and many of their ability to leverage capital is partial to them getting out of the financial trouble, that we don’t upset the apple cart too much by whatever our tax reform package is,” he said. “I don’t think that there are any sacred cows. I’m not going to speak to whether I think that one will survive or not, but I will just say that everything is on the table.”