On April 15, millions of taxpayers took advantage of some tax breaks for the last time.
Technically, that is.
In the tax law and political world, these tax deductions and credits will be back on the books as soon as Congress can agree on how to pay for them.
Known as extenders because they officially are temporary tax laws that get renewed, or extended, usually retroactively by lawmakers who just can't seem to get their legislative acts together in a timely fashion.
Both the House and Senate have passed separate pieces of
legislation to put $26
billion in tax cuts that expired at the end of 2009 back on the books.
On the individual taxpayer side of the extenders ledger, they include the itemized
deduction for state sales taxes, as well as the ability of folks who use
the standard deduction to add part of their property tax payments to
that amount.
The two separate tax extender bills are slightly
different and must be reconciled before a final version can be
sent to Obama for his signature.
But the bigger problem facing Representatives
and Senators is how to pay for the final array of extended tax cuts.
Targeting a bank tax toward extenders: During a Senate Finance Committee hearing yesterday on the Treasury's Troubled Asset Relief Program (TARP) — that's Neil Barofsky, Treasury Special Inspector General of TARP, there to the left answering questions at the hearing — and a proposed financial institution fee, New York Democratic Sen. Charles Schumer came out squarely in support of a bank tax.
In January, the president proposed a 0.15 percent tax on liabilities of big financial institutions to deter risk-taking that most agree contributed to our current economic troubles. The White House estimates the tax would raise around $90 billion over the next decade and wants to use that money to help reduce the federal deficit.
Some Capitol Hill Democrats, however, want to use any bank tax money to pay for the tax extenders.
Other lawmakers, however, disagree with the bank tax, regardless of where any potential revenue might be spent. The main argument against the tax is that it is likely to reduce still tight lending and increase fees for consumers.
The obvious opponents are Republicans, but the Democratic chair of the Senate Finance Committee, Max Baucus of Montana, says he wants to hold more hearings before making any decision on a bank tax.
His counterpart on the House Ways and Means Committee, Rep. Sander Levin (D-Mich.) says he's open to hearing more about the proposed tax, but he hasn't endorsed it.
Meanwhile, taxpayers — both business and individual — are stuck twiddling their thumbs when it comes to 2010 tax planning since they have no idea yet what tax breaks will or won't be available this tax year.
More on the bank tax and extenders: If you missed the Senate Finance Committee hearing, the broadcast was taped for viewing at your leisure.
At Baucus' request, the Joint Committee on
Taxation also put together an informational pamphlet on the proposed bank tax.
And Real Tax Policy has detailed the differences in the House and Senate extenders bills.
Related
posts:
- House OKs extending tax breaks
- Congressional tax wrap-up
- Tax break extenders on tap
- Tax extenders, AMT patch welcome Congress back (2008 version)
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