Congress is working on extending a number of expiring tax breaks. These temporary tax cuts are very important to business; some are for research and development, others let companies write off investments in equipment or facilities.
Corporations really want to see them extended. But nothing’s free in Washington.
“These temporary provisions become very efficient tools for members of Congress to raise money, ” says Lawrence Lessig, a Harvard Law School professor. He says that members of Congress want to keep these tax breaks temporary so they can tell corporate donors: Give us campaign contributions so we can stay in office and renew your tax breaks. This keeps lobbyists busy too, according to Lessig.
“So everybody inside the beltway wins in this Christmas gift process, which we call the extension of these temporary provisions,” he says.
There are other reasons the tax breaks are temporary. For one, Congress can’t decide which ones should be made permanent.
“Those require politically difficult decisions, compromise between Democrats and Republicans,” says Len Burman, director of the Urban Brookings Tax Policy Center. “And those are things that Congress isn’t good at these days.”
Also, if the tax cuts were permanent, Congress would need a permanent way to pay for them. With tax hikes, or spending reductions. And keep in mind, Congress is only considering an extension of the tax breaks through this year.
“This has to be taken up again next year and hopefully with a better outcome,” says Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities.