In prior Housing Plus blog entries we’ve discussed the various tax proposals that have been released over the past four months, including the comprehensive tax reform proposal from House Ways and Means Committee Chairman Dave Camp (R-MI), the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, which would temporarily extend more than 50 expired or expiring tax provisions, and the Obama administration’s fiscal year 2015 budget. One of the more interesting aspects of these proposals is the tension between the goal of comprehensive reform and political viability.
The hallmark of Chairman Camp’s proposal is that it is comprehensive; temporary provisions are either extended permanently or removed. Although not a tax reform proposal per se, the Obama administration’s tax credit initiatives speak in similar permanent terms. On the other end of the spectrum is the EXPIRE Act, which deals exclusively with temporary extensions.
While comprehensive tax reform is the ideal, the consensus is that it’s simply not going to happen this year. Assuming that’s the case, Congress really has only two options in 2014: (1) leave expired provisions alone while waiting for a comprehensive tax reform plan with bipartisan support, or (2) extend the status quo in the meantime. When asked about the EXPIRE Act earlier this month, Chairman Camp and Senate Finance Committee Chairman Ron Wyden (D-Ore) were in agreement that short-term tax provisions are not a sustainable path forward. However, as Chairman Wyden put it, “it makes no sense to let these incentives disappear without a comprehensive reform proposal to replace them when jobs, innovation and research, and people’s homes, are on the line.” As good as comprehensive reform may sound in the abstract, short-term fixes like the EXPIRE Act may continue to be a necessary evil for the near future.