The House Ways and Means Committee announced its long-awaited markup of tax legislation with more than 50 provisions, including expansions of tax credits for lower-income workers and families with children and renewals of expired tax breaks for disparate interests ranging from biodiesel blenders to craft beer producers.
Legislation that would beef up the refundable portions of the Earned Income Tax Credit and Child Tax Credit for 2018 and 2019 also includes a repeal of the so-called ″church parking tax,″ that left some nonprofits paying taxes on transportation-related fringe benefits for their employees as part of a change made by the 2017 tax overhaul. Those and other changes in the bill would cost a total of $102.5 billion over a decade, according to the Joint Committee on Taxation, with no offsetting revenue increases or spending cuts.
The panel will take up four separate pieces of legislation Thursday, including the tax extenders measure, which also would provide tax benefits for victims of natural disasters that occurred in 2018 and this year. Two other bills on tap would extend some retroactive tax benefits to same-sex married couples and add $1 billion in each of the next two fiscal years for child care funding under the Temporary Assistance for Needy Families program.
The extender bill would cost $42.5 billion in all, according to the JCT, with tax relief for those in presidentially declared disaster areas accounting for nearly $9.3 billion of that figure. The extenders portion is more than paid-for, however, through ending the doubling of the estate tax deduction at the end of 2022 rather than 2025 under current law. The net cost of the bill, offsets included, is $4.9 billion over a decade, according to the JCT.
All of the extender provisions would be good through 2020 under the Ways and Means bill. But ending the estate tax break early is likely to spark an outcry among Republicans, including those controlling the Senate, meaning further negotiations are probably necessary before a bill reaches President Donald Trump’s desk.
Church parking, Gold Star kids
House Ways and Means Chairman Richard E. Neal, D-Mass., has long complained about the 2017 bill being pushed through Congress in less than two months, resulting in nearly 80 ″technical″ errors in the bill, including the church parking tax and an unintended hike in tax rates on benefits paid out to so-called Gold Star families where a parent was killed in the line of duty. The Gold Star families error is corrected in a retirement bill passed last month by the House.
″When Republicans passed their tax law in 2017, they prioritized big businesses and missed significant opportunities to make the tax code fairer for middle-class workers and vulnerable families,″ Neal said in a statement.
Neal described the bill he is introducing, which includes the EITC and Child Tax Credit provisions as doing “the opposite — putting hardworking Americans first and making it easier for families to afford childcare and other day-to-day necessities in an increasingly expensive world.”
Neal had foreshadowed for months that he would be introducing legislation to expand what has become the tax code’s chief poverty-fighting tool, the EITC, which paid out some $70 billion in fiscal 2018 to households mostly earning less than $50,000. Of that figure, $61.5 billion was in the form of refunds, or payments to households in excess of their tax liability because they earned too little.
One of the chief features of Neal’s bill will include a two-year expansion of the EITC that would greatly increase benefits for childless recipients, and permanently change certain provisions that had barred some EITC-eligible parents from receiving the tax credit.
The legislation would also make the $2,000 child tax credit fully refundable even for those with less than a $2,000 tax bill. Currently, the credit is only partially refundable for those whose tax liability is less than $2,000, with the maximum credit being $1,400.
Neal’s bill would also double the amount of expenses eligible for the child and dependent care tax credit to $6,000 for a single filer and $12,000 for joint filers, while extending the credit for middle-income earners. The bill would change the phase-out threshold for the credit from an income of $15,000 to $120,000.
Biodiesel, craft beers, paid leave
The largest of the other three bills is a 57-page extenders measure largely devoted to renewing tax breaks through 2020 that had expired as far back as Dec. 31, 2017.
The costliest of the extensions, and one that has been pushed throughout this year by Senate Finance Chairman Charles E. Grassley, R-Iowa, is the $1 per gallon biodiesel tax credit. The three-year renewal and extension of that credit would cost $8.9 billion, according to the JCT.
Most of the extenders would renew items that lapsed at the end of 2017, but six provisions are included to extend tax breaks expiring at the end of this year. Those include the reduced excise taxes on certain craft beers, distilled spirits and wine and a new credit for employer-paid family leave. Both the alcohol and paid leave provisions were initially established in the 2017 tax overhaul.
The measure would also extend through 2020 the start date for construction of renewable power facilities, including for electricity produced by wind, to qualify for production tax credits.
The legislation also includes a measure that spelled trouble last year for Republicans when they tried to pass a tax extenders bill.
A bill authored by Rep. Mike Thompson, D-Calif., would increase the excise tax for the Black Lung Disability Trust fund to $1.10 per ton of coal mined underground and 55 cents per ton of surface-mined coal. That would return the rate to what it had been before it expired and dropped to 50 cents and 25 cents, respectively, on Jan. 1.
If the measure becomes law, the higher rates would go into effect the first month after enactment. The JCT estimates the provision would raise $257 million over 10 years.