Statement | Budget, Taxes, and Public Investment

News from EPI Year-end budget deal shouldn’t include temporary tax breaks for special interests

With the today’s Senate approval, Congress has passed a year-end spending deal that will avert a shutdown. But tacked onto that deal are a package of temporary tax breaks for special interests. In 2015, the House and Senate leaders struck a bipartisan deal that ostensibly put “an end to the repeated tax extenders exercise that has plagued Congress for decades.” Despite that, and despite the fact that these temporary business tax breaks haven’t been law for two years, the zombie tax extenders are back.

Temporary tax breaks, particularly those made retroactively and which apply to narrow business interests, are an awful way to run tax policy. And groups across the ideological spectrum agree on this point. Retroactive tax breaks, in particular, are truly terrible economic policy, as you cannot incentivize behavior that has already taken place—making them nothing but a windfall for special interests.

If any of these policies are good tax policy, then they should be debated on their merits and made permanent. That they are not made explicitly permanent after a real debate on their merits, and are instead smuggled in at the end of the year, speaks volumes. Meanwhile, progressive priorities like a bolstering of refundable tax credits, which could provide real benefits to U.S. families have been left behind.

If these temporary-in-name-only tax breaks can’t stand on their own merits, then they have no business being in a year end budget deal. Congress should stick with the deal they had in 2015 and put a stop to these end-of-the-year corporate handouts.

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