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WHAT GOT EXTENDED

December 11, 2006

The tax bill passed early Saturday is called the "extender" bill because it extends the life of a passel of perennially-expiring tax provisons. These provisions have been repeatedly enacted for a year or two at a time, some for about two decades now, in a cynical game to conceal their true size. By pretending that they won't be re-enacted every time they expire, Congress avoids counting their true cost over their 5-year and 10-year budgeting periods.

The provisions extended by the new bill, and their lives, are listed below (courtesy of RIA):

-Research credit—two years (in 2007, an additional Alternative Simplified Credit that does not use gross sales as a factor in the regular credit would be available).

-Work Opportunity Tax Credit/Welfare-to-Work Tax Credit—two year extension for both credits, but for 2007 the two credits would be combined and modifications would apply.

-Above the line deduction for tuition expenses—two years.

-New markets tax credit—one year.

-State and local sales tax deduction—two years.

-Earned Income Tax Credit (EITC) for combat pay—through 2007.

-Qualified Zone Academy Bonds—through 2007.

-Above-the-line deduction for teacher classroom expenses— two years.

-Indian employment tax credit— two years through 2007.

-Accelerated depreciation for business property on Indian reservation— two years through 2007.

As many of these provisions expired at the end of 2005, this means the interested lobbyists will barely be back from Cancun and Vail before it's time to get back to work on another extension.

Other Tax Update coverage of the extender bill:

PROTECTING ANOTHER VITAL AMERICAN INDUSTRY

CONGRESS THROWS BONE TO AMT-ISO VICTIMS

LAST GOP TAX BILL ADDS HSA IMPROVEMENTS

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