7/27/17 – Tax Extenders

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When Congress finally gets around to next year’s spending it should end the shenanigans with tax extenders.

Here’s what’s happening behind the headlines.

Tax extenders refer to several dozen tax measures.  Mostly tax cuts.  They’re temporary.  Good for a year or two. And Congress renews most of them year-after-year. Some have been around for decades.

You might ask, “Why doesn’t Congress make these long-time tax breaks permanent?”

The answer is simple: Fundraising.

Both parties use the annual renewal process to threaten lobbyists.  And raise money. Their pitch goes something like this.  “You need to help me help you.  Or the tax break you like will go away.”

There’s another reason why Republicans and Democrats like tax extenders.

When the CBO reviews Congressional spending it must assume these tax breaks will expire.  Congress will often renew these tax breaks after the CBO reviews spending measures.  It’s kind of like cooking the books.

Pretty clever, huh?

It’s an unspoken agreement between the two parties.

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