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Hints on Federal Extender Timing

CCH is reporting that Congressman Richard E. Neal (D-Mass.) thinks the extenders will be considered in the spring:

Speaking at the annual convention of the New Markets Tax Credit Coalition in Washington, D.C., said that Ways and Means Chairman Dave Camp, R-Mich., will probably decide on whether to pursue comprehensive tax reform by February or March of 2014. If Camp decides that passing tax reform is impossible during an election year, then a retroactive tax extenders bill will probably get a vote in the House, according to Neal.

The (Eastern Iowa) Gazette quotes Senator Chuck Grassley (ranking Republican on the Senate Finance Committee) as indicating that passing the extenders might occur earlier in 2014:

There won’t be any extension before Christmas, Grassley predicted, but not because of political opposition to the credits. Based on past performance, he said Wednesday, Congress will come back after the New Year and approve four dozen or more tax credits.

“There are a lot of economic interests” represented in the tax credits, he explained. Those interest groups collectively “put a lot of pressure on Congress to re-institute the credits.”

In The Hill we find a comment from Congressman CHarles Boustany Jr. (R-La.) indicating action might be delayed much later:

“My sense is, if we were to mark up an extenders bill, we would definitely lose momentum,” Rep. Charles Boustany Jr. (R-La.), a senior member of the Ways and Means Committee, told The Hill. “It sort of deflates the effort.”

Boustany suggested that keeping tax extenders at arm’s length would strengthen tax writers’ hands as they try to marshal support for reform.

The Wall Street Journal thinks it could take all of next year:

Many lawmakers expect the package to be renewed once again sometime in 2014. But given the paralysis gripping Congress, it could take a year.

Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, said it isn’t a broader tax overhaul that is holding up the extenders but rather House Republicans’ focus on President Barack Obama’s health-care overhaul.

“You can’t have this kind of roller coaster” in tax policy, said Mr. Levin. Waiting a year to renew the extenders “in some cases…would be very harmful.”

Politico’s Morning Tax Newsletter is hearing that some members are pushing for an earlier process:

FACTS OF LIFE FROM MORNING TAX: Congress will, as they always do, eventually tackle the tax extenders and institute them retroactively, also as they always do. The question is when and it appears some members are asking for that to be sooner in the year, rather than when tax reform comes onto the docket.

Forbes explains why it might be a lot more complicated in 2014 than in years past:

Congressional aides say lawmakers won’t pass an extender bill as free-standing legislation. Thus, it would have to ride with some other measure. But what?

The budget agreement on the table today would be a two year deal, so there would be no budget resolution in calendar 2014. The threat of a January government shutdown would go away. And there is little chance that Congress would add the extenders to controversial measures such as the farm bill. The “doc fix” that resolves a long-standing mess involving Medicare payments to physicians could be a vehicle, but that measure may be added to the pending budget agreement.

The dynamics of the extenders also changed when Congress permanently patched the AMT last January. That measure will keep millions of middle-class households off the tax. On one hand, by removing the AMT patch out from the annual extenders game, Congress eliminated a key bit of leverage to pass a bill. On the other, Congress vastly reduced the total cost of the extenders. The permanent AMT patch cost $1.8 trillion over 10 years.

Then there is the matter of how the extenders fit into tax reform. Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways & Means Committee Chairman Dave Camp (R-MI) have said the extenders should be considered as part of tax reform– where many would presumably disappear. It is increasingly unlikely that such a rewrite will happen in 2014 but it isn’t clear when, if, or how, the tax-writers will decouple the extenders from the reform effort.

Finally, Congress will have to decide whether to pay for extending these temporary tax cuts or not. Will a new budget resolution require this? And will Congress comply?

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