12/31/15 Tax Extenders
Imagine if during your routine check-up your dentist secretly drilled holes in a few teeth. He knows they would develop into cavities. Creating more business for him.
This is exactly what’s happening with tax extenders legislation.
Washington has countless tax breaks in the tax code. It also has dozens of other tax breaks that are good for only a year. Yet Congress renews these one-year tax breaks year-after-year. Some have been around for decades. They’re referred to as “tax extenders.”
You might ask, “Why doesn’t Congress make these long-time tax breaks permanent?”
The answer is simple: Fundraising.
Over the years, power has shifted many times between the two parties. At anytime Congress could have made the tax breaks permanent. But they didn’t want to.
They use the annual renewal 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.”
Campaign cash over tax extenders is worth millions. To both parties.
But it gets better.
Congress bundles dozens of tax breaks into one bill. Then Democrats and Republicans tell supporters their hands were tied. They had to vote for the bad tax breaks in order to get the good ones. Pretty clever, huh?
It’s an unspoken agreement between the two parties.