WASHINGTON – Wind farms, NASCAR tracks and filmmakers would keep their treasured tax breaks as part of an $85 billion package of temporary tax cuts passed by a key Senate committee Thursday.
Some U.S. firms with foreign income would be winners too after Senate Finance Committee Chairman Ron Wyden, D-Ore., backed off plans to significantly trim the package.
Congress routinely passes the package of more than 50 temporary tax breaks for businesses and individuals, but they were allowed to expire at the start of the year. The Senate Finance Committee voted Thursday to extend all but two of them through 2015.
The bill passed on a voice vote, with support from both Democrats and Republicans.
Congress is expected to pass the tax package by the end of the year, so businesses and individuals can continue to claim the tax breaks when they file their 2014 taxes next year.
Among the biggest breaks for businesses: A tax credit for research and development, an exemption that allows financial companies to shield foreign profits from being taxed by the U.S., and several provisions that allow businesses to write off capital investments more quickly.
The biggest tax break for individuals allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns. Another protects struggling homeowners who get their mortgages reduced from paying income taxes on the amount of debt that was forgiven.
Wyden acknowledged that periodically extending temporary tax breaks makes it difficult for businesses and families to plan. He said he hopes to work on a comprehensive overhaul of the tax system, making some of the tax breaks permanent while eliminating others.
“Many of these extenders are well-intentioned and ought to be permanent,” Wyden said. “Their stop-and-go nature obviously contributes to the lack of certainty.”
But Wyden’s inability to scale back the package shows how difficult it can be to cut cherished tax breaks.
“The challenge on taxes is to always try to find the common ground where you can move ahead,” Wyden said after the vote.
Wyden’s initial draft of the bill would have eliminated a generous tax credit for using wind farms and other renewable energy sources to produce electricity. But the credit was restored, at a cost of $13.3 billion.
Sen. Chuck Grassley, R-Iowa, claimed credit for saving it.
“Renewable energy supports thousands of jobs and generates billions of dollars in investment across the country,” Grassley said. “It’s good news for the economy and for energy diversity to restore these provisions.”
Other restored provisions include a tax break that allows motorsport race tracks to write off improvement costs more quickly, and a break that allows TV and movie productions to write off expenses more quickly. Certain sexually explicit productions are ineligible.
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