The House passed a bill Wednesday evening that would retroactively extend for one year a slew of tax breaks that expired at the end of 2013. Their estimated cost: $42 billion.
Put that next to Uncle Sam's $3.65 trillion annual budget, and it's not exactly a back breaker. Nor is it a huge chunk of the more than $1 trillion in tax breaks taken annually by individuals and businesses.
But it's real money nonetheless, and it's the kind of money Congress has been spending every year or two when it renews virtually the same "temporary" tax breaks over and over.
That they often renew them at the last minute -- and can only agree to do so for the year that just passed -- is nothing to be proud of.
"[T]hat we are only addressing [the tax extenders] now is extremely damaging to businesses and families that need to plan and make investments," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Lawmakers' "we'll get to it someday" approach to tax policy also means they don't seriously debate which tax breaks make sense economically and which are just special-interest giveaways.
"The best option would be for Congress to decide which provisions are worth making permanent and pay for them by cutting unproductive tax expenditures," Tax Policy Center director Len Burman wrote in a blog post.
Maybe next year. Or the year after that. Or ...
In the meantime, here are the 5 biggest tax extenders in the House bill, the cost of which would not be offset by other tax increases or spending cuts.
Research and development credit: $7.6 billion. This credit subsidizes companies' research in the development of products and technologies.
Wind production tax credit: $6.4 billion. This renewable energy credit goes to wind farm owners based on the amount of electricity they produce or the cost of their facilities.
Tax deferral for banks on interest and dividends earned abroad: $5.1 billion. This measure, known as the exception to "Subpart F" rules, lets financial institutions defer paying U.S. tax on interest and dividend income they earn abroad. They only have to pay that tax when the money is brought back to the United States.
Exclusion from income of mortgage debt that's been forgiven: $3.1 billion. When you sell your home for less than what you owe the bank or your home is foreclosed, the bank may agree to forgive the remaining debt you owe. But the IRS typically treats that forgiven debt as taxable income to you. This tax break would allow you to exclude it from your income.
State and local sales tax deduction: $3.1 billion. If you itemize your taxes, this measure would let you deduct the state sales taxes you've paid in lieu of state income taxes. This deduction is a boon for itemizers who live in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Those are the states that don't impose an income tax but do have a general sales tax.
