Energy companies, commuters and even rum distillers are looking to Congress to prevent their taxes from increasing. Unfortunately for them, the halls of congressional office buildings are mostly quiet, as lawmakers skipped town last week without extending dozens of popular tax credits.
“Congress has been leaving at the end of the year without an extension of these breaks. It’s very upsetting to businesses because they can’t plan,” said Kurt Sturn, a principal with the Reznick Group, a Baltimore-based accounting, tax and business advisory group. “Our clients there are very frustrated. They can’t make any decisions.”
Increased tax-free commuter benefits for parking and mass transit, deductions for paying state and local sales taxes, research and development credits, an exemption for millions of Americans from a special and antiquated income tax, and more than 60 other tax credits and benefits disappear with 2011.
Congressional tax policy has become so tenuous that lawmakers have dubbed these annual tax benefit extensions as “extenders.” Congress sometimes meets its deadline of continuing these provisions for another year. Lawmakers can, and have, retroactively renew these tax credits. Sometimes they expire.
Federal tax and spending policy has become consumed by a congressional unwillingness to reveal the true, long-term costs of sustaining current law. Whether it is these “extenders”, a measure to shield doctors treating Medicare patients from a sizable pay cut, or income tax rates, budget policy has taken an increasingly piecemeal approach over the past decade on Capitol Hill.
“If you’re going to give us higher taxes, great, we’ll plan for that. If you’re going to give us breaks here, great, we’ll go ahead and plan there,” said Sturn. “But if you don’t let us know what the playing field is, how can we operate?”
Typically, election years are Congress’ least accomplished, though the list of expiring tax credits and income rates, known widely as the Bush Tax Cuts, will force upon lawmakers in 2012 something even more unpopular than inaction: a significant tax increase on nearly every American worker and business in 2013.
View the list of expiring federal tax provisions here.
Rich Edson joined the FOX Business Network as a Washington correspondent in October 2007.