Grassley On Tax Extenders and Disaster Tax Relief
Prepared Remarks by Senator Chuck Grassley of Iowa
On Tax Extenders and Disaster Tax Relief
Thursday, February 14, 2019
For several months now, we have been working to extend a set of tax provisions that expired at the end of 2017, commonly known as the tax extenders.
We have also been working to enact bipartisan disaster tax relief to help families and businesses that continue to recover from the disasters that occurred across the country in 2018.
The best and most timely option to advance these provisions is with the government funding deal being worked on this week.
There have been press reports stating that if the extenders are not part of the funding bill, they are “dead for good.” I reject that conclusion.
Regardless of what happens on a bill to keep the government open, I will continue to fight to get the extenders enacted and work toward a longer-term resolution.
Since the House has failed to send us a government funding bill that includes the tax extenders and disaster tax-relief provisions, look for me to introduce a bill addressing these tax matters here in the Senate. And I would ask my colleagues on the Finance Committee to join me.
When these provisions were extended early last year, the tax extenders had been expired for more than a year already.
Now we are back in the same place, with these tax incentives now expired for more than a year again.
It seems to me that the right thing to do now is to extend these provisions for 2018 and 2019.
Why two years? First, we need to provide clarity for taxpayers trying to file their 2018 returns, which are due in just over eight weeks.
Even though the year has obviously ended, our repeated extension of many of these provisions has led individuals and businesses to assume we will do so again.
And they relied on that last year to make business decisions. In other words, people did what we wanted them to do when these provisions were created.
We should not retroactively punish them now for that.
Second, we should provide certainty for this year to give us room to take a long-term view on all of the tax extenders.
I want to stress that I want to find a long-term resolution to these provisions so we can stop the repeated extensions of temporary tax policy.
But while we work on that, these tax extenders are intended to be incentives. And to be successful, they need to be in effect when individuals and businesses are considering whether to make the investment required to take advantage of the particular tax provision.
I want to go into more detail on what the tax extenders are. The number has changed over time, but there are currently around 26 temporary tax provisions that expired at of the end of 2017.
These include provisions incentivizing alternative fuels, electric vehicles, and the construction of energy-efficient homes.
There are provisions that incentivize the production of coal on Indian lands, provide an exclusion from income of the discharge of indebtedness on a principal residence, and provide a deduction for tuition and related expenses.
Within these 26 provisions there is probably something that is very important to every senator on both sides of the aisle.
I want to focus on two of them in particular.
The first is the railroad track maintenance credit, otherwise known as the short line credit.
This provision provides short-line railroads a credit equal to a percentage of the capital they invest to maintain and improve their tracks.
Short-line railroads are small business railroads that are vital to keeping rural and small-town America connected to the national economy.
And they are a particularly important part of our transportation system to get agricultural and other products to market across the country and for export abroad.
For example, the Iowa Interstate Railroad, which operates between Council Bluffs and Chicago, connects Iowa companies such as the Elite Octane ethanol plant in Atlantic, Iowa, to the world market.
According to the American Short Line and Regional Rail Association, short-line railroads operate more than 47,500 miles of track and make up 29% of the freight rail network of our nation.
In a report prepared by PWC last year, it was noted that the short-line industry directly provided more than 17,000 jobs in the United States in 2016, and supported more than 61,000 jobs overall.
This credit has been extended many times since it was first enacted on a temporary basis in 2004.
Legislation introduced in the last Congress would have made the short-line credit permanent, and the bill had 56 cosponsors. The bill is led by Senators Crapo and Wyden and has already been reintroduced for this Congress.
Another tax extender that is very important, and particularly for Iowa, is the biodiesel tax credit.
Generally, this provision provides a tax credit of $1 per gallon of biodiesel and renewable diesel. This credit helps provide for a more sustainable future by reducing our dependency on fossil fuels and promoting a renewable, domestic resource.
Plans for promoting environmental efficiency have been in the news lately, and an extension of the biodiesel tax credit is needed to keep more people working at their jobs in this industry.
For example, I have learned that Western Iowa Energy, in Wall Lake, Iowa, has reduced run time forecasts by 60 percent and they are running at 40 percent capacity. They are also putting capital improvement projects on hold.
In Wall Lake, this reduction in run times means that there are 26 trucks per day that are not operating, and potential layoffs are on the horizon if the tax credit is not extended as soon as possible.
According to the National Biodiesel Board, the U.S. biodiesel industry supports more than 60,000 jobs and generates more than $11.42 billion in economic impact.
A group of renewable energy stakeholders wrote to congressional leaders last week. Their letter reads, in part, “Allowing these tax incentives to lapse has created uncertainty for investors and the industry about the availability of these credits; jeopardizing the long-term investments necessary for the development of these biofuels.”
I ask unanimous consent that the entire letter I read from be printed in the record, along with an additional letter from members of the biodiesel supply chain, and a letter supporting extension of the $0.50 per gallon alternative fuels tax credit.
The short line and biodiesel industries, and many other businesses and individuals, have used these provisions as Congress intended.
But when they are not extended in a reasonable manner, jobs and the activity that Congress intended to promote are put at risk.
I do not want my comments to imply that each tax extender should be permanently extended.
In the long-term, Congress needs to decide whether or not these provisions should be allowed to expire, be phased-out, or made permanent as current policy or modified in some way.
Those decisions need to be made after we have resolved the immediate crisis that is being caused by the current lapse of these provisions for 2018.
At the end of last Congress, then-Ways and Means Chairman Brady introduced legislation that contained a permanent extension of the short-line credit and a long-term phase-out of the biodiesel credit.
I believe many Members support these proposals. They could be the solid foundation for a long-term package.
We need to get past today, so we can chart the course for a reliable future for the tax extenders.
As I said at the start, we also must not forget those American families and businesses that continue to recover from the terrible disasters that occurred last year.
We have a series of disaster tax relief provisions that have passed on previous occasions with bipartisan support.
This relief also should be included in the government funding bill this week.
These disaster tax-relief provisions include reduced penalties and easier access to retirement funds so individuals and families can get back up on their feet faster and rebuild their lives.
They also make it easier for disaster victims to claim personal casualty losses. And they suspend certain limitations on charitable contributions to encourage more donations for disaster relief.
For businesses affected by the disasters, tax relief is available to help them retain employees while the business gets back up and running again.
Similar disaster tax-relief provisions were included in the Bipartisan Budget Act of 2018, as well as the Disaster Tax Relief and Airport and Airway Extension Act of 2017.
Both of those bills passed with wide bipartisan margins. Let’s continue that tradition and make sure last year’s disaster victims don’t have to wait any longer to access this important tax relief.
I yield the floor.
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