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House and Senate Deadlocked Over Tax Extenders

NAICU Washington Update

September 30, 2008

The IRA charitable rollover and the tuition deduction remain in limbo as Congress once again failed to agree on an extension of a host of tax breaks that expired last year. Members in both chambers continue to disagree over the cost of the bill, and how or if that cost must be offset.

The Senate, which had been unable to agree on the details of a package in the past, ended months of debate by passing a compromise bill on September 23. The bill contained a two-year extension of all the expired provisions, including the IRA rollover and tuition deduction. Tax benefits would be retroactive for all of 2008, and would be in effect through the end of 2009.

The House passed a different version of the extenders bill on September 26. While the House bill also would extend the tax provisions for two years, the cost of the provisions was fully offset, unlike the Senate bill which was only partially offset. Conservative Democrats in the House insisted on the bill being fully offset. Senate Republicans, though, view extensions of current law as not requiring offsets, and regard fully paying for the bill as the equivalent of unnecessary new tax increases.

Both sides remain deadlocked. The House reconvenes this week to again consider an emergency rescue plan for the financial services industry, so there is one more opportunity for the House to take up the Senate version of the extenders bill. Unfortunately, though, House Majority Leader Steny Hoyer (D-Md.), has said the House will go no further on the extenders. Similarly, Max Baucus (D-Mont.), chairman of the Senate Finance Committee, has indicated the Senate will not take up additional extender bills this session.

Contact

• Karin Johns
  karin@naicu.edu