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The Senate Finance Committee has approved a bill to protect taxpayers from the alternative minimum tax (AMT) for two years, and extend the research and development credit for the same period of time.

Finance Committee Approves Bill Extending Tax Deductions

  • 8/8/2012

Finance Committee Approves Bill Extending Tax Deductions

The Senate Finance Committee has approved, by a bipartisan vote of 19 to 5, a $205 billion package of expiring tax breaks, but the measure faces an uncertain future on the Senate floor and in the Republican-controlled House. The modified Family and Business Tax Cut Certainty Bill of 2012 would protect taxpayers from the alternative minimum tax (AMT) for two years, and extend the research and development credit for the same period of time.

The Finance Committee’s modified package also would extend for two years the deduction for state and local taxes and exceptions under Subpart F for active financing income. In addition, it would extend and increase the maximum amount and phase-out threshold under Code Sec. 179. The measure includes an amendment for a one-year extension of the Code Sec. 45 production tax credit for electricity produced from wind. The current law expires at the end of 2012.

"In the face of an effort to end this incentive, I persuaded committee leaders to include the extension in a way that keeps it at full value and that puts the wind-energy production tax credit in a strong position for the floor debate this fall," former Finance Committee chairman Sen. Charles E. Grassley, R-Iowa, said in a written statement. "No single energy tax incentive should be singled out over others, energy-related and not, before a broad-based tax reform debate."

The modified AMT proposal would increase the exemption amounts for 2013 to $51,150 for individuals and $79,850 for those married and filing jointly. The proposal also would allow the nonrefundable personal credits against the AMT in both 2012 and 2013. The proposal would be effective for tax years beginning after December 31, 2011. The two-year extension of the proposal is estimated to cost $132.2 billion over 10 years. The bill also eliminated nearly 25 percent of the usual tax-extenders package, getting rid of tax incentives for GO Zones, refined coal, book and computer inventory charitable deductions, and a plug-in conversion credit.

In addition, members approved an amendment indicating that tax reform should be the focus of the next Congress. The provision declares that it is the sense of the committee that comprehensive tax reform is vital to economic growth, and that a major focus of tax reform should be broadening the base so long as it lowers tax rates and, when possible, responsibly phases out energy tax expenditures.

"No bill is perfect, but what’s important is this shows the American people that Congress can work together to get things done," said Committee Chairman Max Baucus, D-Mont., in a written statement. "This bipartisan work is just what all members of Congress will need to do with the fiscal cliff looming and tax reform on the horizon."

House Speaker John Boehner, R-Ohio, told reporters that House Ways and Means Chairman Dave Camp, R-Mich., and Rep. Patrick J. Tiberi, R-Ohio, were working on a report on the extenders based on a series of hearings, but he refused to commit to any particular action until they had finished their work.

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