Grassley On Tax Extenders Benefits
Remarks by U.S. Senator Chuck Grassley of Iowa
Benefit Individuals, Green Energy and More
the past week there have been ongoing discussions between congressional
leadership and the Administration relating to an agreement on budget caps and
raising the debt limit. Those discussions produced an agreement that was
announced Monday night.
I understand reaching an agreement was important to ensure the full faith and
credit of the United States, I am disappointed the final agreement does not
address a subject that has been causing heart-ache for millions of taxpayers
for at least the past six months. That subject is what is known as “tax
decades, Congress has routinely acted on a bipartisan basis to extend a number
of expired or expiring provisions. Typically, their extension would be included
as part of a larger spending package or budget deal at the end of the year.
this never occurred at the end of last year. Now, here we are almost seven
months after the end of 2018 and three months after the close of the regular
tax filing season, and taxpayers still have no answer.
budget and debt limit agreement announced Monday is yet another missed
opportunity to provide answers for the millions of taxpayers – both individuals
and businesses – who are waiting on Congress so they can finalize their 2018
taxes and in some cases even stay in business.
Finance Committee Ranking Member Wyden and I have been ready and willing to
address tax extenders since early on in this Congress, the new Democratic
majority in the House of Representatives has been reluctant to act.
seems as though the House Democrats are unaware of the historic bipartisan
nature of tax extenders or how these provisions even apply to taxpayers,
industries and the economy. This is evident from characterization of these
provisions by some of these members as ‘just tax breaks for corporations and
fact, the overwhelming majority of the “tax extenders” either benefit
individuals and families directly, or they benefit our communities by giving a
boost to local businesses that many people directly rely on for jobs and to
support their local economies.
illustration purposes, I’ve broken the tax provisions that expired in 2017 into
four categories: 1. Tax Relief for Individuals, 2. Green Energy Incentives, 3.
Employment and Economic Incentives for Distressed Area, and 4. General Business
you look at this chart you will see these categories broken down by the
relative cost of the extension of the tax extenders in each category.
you can see, based on JCT estimates of a two-year extension of these provisions
for 2018 and 2019, the largest cost associated with extending them is for what
I term “green energy incentives.” These green-energy incentives account for
nearly 60 percent of the cost of an extension.
incentives include provisions to encourage the use and production of clean and
renewable fuels, to promote electricity generation from certain clean and
renewable sources and tax incentives for more energy efficient buildings and
I would have thought the new Democratic majority in the House would be all
about “green jobs” and reducing our nation’s carbon emissions through
alternative-energy sources. Yet, they have been reluctant to embrace a
bipartisan tax package with nearly 60 percent of the cost dedicated to
long delay in addressing these provisions is needlessly putting thousands of
good paying green jobs at stake. A couple of weeks ago we saw a biodiesel plant
in Nebraska close down, costing about 40 employees their job. And just today
Renewable Energy Group (REG) announced it’s closing a Texas plant due to the
uncertainty of the tax credit. Should we fail to extend the biodiesel tax
credit soon, many more could follow. That would put the 60,000 jobs supported
by the biodiesel industry nationwide in jeopardy.
“green energy” provisions, individual provisions represent the second largest
component of the tax extenders, totaling nearly a third of the cost.
provisions include relief for homeowners who obtain debt forgiveness on a home
mortgage, a deduction for mortgage-insurance premiums and a provision that
allows college students to deduct tuition and related expenses. They also
include incentives for individual consumers to purchase energy efficient
products for their home, as well as certain types of alternative vehicles.
highlight just one of these provisions, in 2017, over 1.5 million taxpayers
took advantage of the college tuition deduction. You can think of that as over
1.5 million students who have been left dangling for 2018 and so far this year
as Congress continues to consider whether or not to extend this deduction. And,
for some, this deduction of up to $4,000 for education expenses can be the
difference between continuing their education or waiting another year to finish
a degree and move up to a better job.
remaining two categories are small in terms of cost in comparison to the first
provisions relating to Employment and Economic Incentives for Distressed Areas
makes up only 4.1 percent of the overall cost and consists of two provisions.
They are the Indian Employment Credit and the Empowerment Zone Incentives. I
find it hard to believe the New House Democratic majority finds it
objectionable to incentivize employers to hire Native Americans or provide
incentives to encourage businesses to locate and bring jobs to low-income
areas. And, if we can’t address these two employment and economic incentives,
how are we going to deal with two much larger ones that expire at the end of
this year – the Work Opportunity Tax Credit and the New Markets Tax Credit?
I guess it must be the final category, which I have termed General Business
Incentives that the House Democratic majority must find so objectionable. These
provisions make up a whopping 4.5 percent of the total cost of extending
provisions that expired at the end of 2017.
of these provisions have very minimal cost as they only accelerate when a
business may deduct certain deductions and not whether the costs are deductible
in the first place.
the most costly of what I term general business incentives is also likely the
most popular. That’s the Short Line Tax Credit. This provision offers a tax
credit to short-line railroads for qualified maintenance expenditures. This
credit isn’t available to the largest railroads, or Class I railroads.
credit benefits smaller railroads that are critically important for farmers and
many manufacturers to get their products to the global market. For example, in
Iowa, according to recent data from the American Short Line and Regional
Railroad Association, there are nine short line and regional railroads.
credit isn’t just supported by and important to the railroads themselves, it’s
also supported by the users of short line railroads who depend on them to get
their products to markets around the world. For example, Midwest soybean
farmers selling to the Asian market typically must ship their crop by rail to
the Port of Seattle, and the short-line railroads are critical to that
fact is this provision is far more than some sort of “give away” to business.
It’s a provision that’s important to whole communities. This is probably a big
reason why legislation making this credit permanent currently has 50 cosponsors
in the Senate and 228 cosponsors in the House.
hope I have been able to clear up some of the misunderstanding regarding tax
extenders for the New Democratic majority in the House. Extenders are not just
about businesses or corporations. They overwhelmingly benefit individuals,
green energy and promote job creation in urban and rural communities alike.
order to provide certainty to the people who relied on these provision in 2018
and potentially this year, we should extend them at least through 2019 as
quickly as possible. This could have been done as part of the bipartisan
agreement on the budget and debt limit announced Monday. Unfortunately, I fear
a misunderstanding of what extenders are and who they benefit on the part of
the new Democrat House Majority contributed to them being left out of the deal.
know that there are those who question the need to extend these provisions in
perpetuity, and I agree with them. That’s why the Finance Committee created a
series of task forces to examine these policies for the long-term. The task
forces were charged with examining each of these provisions to determine if we
can reach a consensus on a long-term resolution.
look forward to receiving the submissions of the task forces later this week.
Hopefully, these submissions will provide a basis for the Finance Committee to
put together an extenders package before then end of the year that includes
longer-term solutions for as many of these temporary provisions as possible.
This is important so we can stop the annual exercise of kicking the can down
in the meantime I remain committed to acting as soon as possible so taxpayers
who have relied on these provisions in 2018 don’t end up feeling like Charlie
Brown after Lucy pulls the football away.