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JUST WHAT I WANTED - ANOTHER BIG TAX BILL

December 08, 2006

The congresscritters cut a deal on the "extenders" package yesterday. This is an early Christmas present for those of us who charge by the hour for tax advice.

The package retroactively reenacts a number of tax breaks that expired at the end of 2005. The provisions reinstated for 2006 and 2007 include, among other things:

* an expanded and modified version of the research credit ($16.5 billion over 10 years);
* the deduction for state and local sales taxes ($5.5 billion);
* the above-the-line deduction for qualified higher education expenses ($3.3 billion);
* the above-the-line deduction for teachers' classroom expenses ($379 million);
* expensing for brownfields remediation costs ($349 million);
* tax incentives for investment in the District of Columbia ($392 million);
* tax incentives for Indian employment and business property depreciation on Indian reservations ($405 million);
* the 15-year straight-line cost recovery for qualified leasehold and restaurant improvements ($5.2 billion);

Of course, this is all dishonest. They have no intention of letting these expire after 2007, either. The "temporary" extension accomplishes two things, from the point of view of a congresscritter:

- They can pretend their favoritism to well-connected constituencies isn't eroding the tax base as much as it really is, and

- They can expect lobbyists for these tax breaks to show up at their fund-raisers as they try to get the provisions re-enacted next year.

Worse for the rest of us, the extenders are only part of it. The bill explanation alone is 130 pages. Now we get to open this lovely package and see what surprises are in it.

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