Tax Extenders: Don’t Extend Bad Policy
Every year or so, Congress reauthorizes a package of expiring tax provisions commonly known as tax extenders. While not the case every year, every expiring extender in this year’s package grants an economic privilege tailored to some particular group or business interest. Therefore, Congress should not renew any of these extenders and should instead allow them all to expire.
The recurring, temporary policy of tax extenders imposes unnecessarily high costs that are easily avoidable. Forty-seven distinct tax provisions expire in December 2016, 43 of which are positive tax expenditures, costing taxpayers $19 billion over 10 years. Additionally, the yearly indecision around the extenders contributes to economic uncertainty, which distorts long-term financial planning and slows economic growth. Temporary tax extenders also induce economically unproductive lobbying driven by special interests.
Last year, Congress chose to extend some expenditures indefinitely while extending others temporarily (each extender expires unless Congress chooses to renew it). While not all tax extenders are created equal—some are corporate favoritism, pure and simple, whereas others have the potential to alleviate economic distortions in the income tax—the convention of temporary tax extenders should be ended. Meanwhile, all of the provisions in this year’s package should be allowed to expire.