Two tax extender bills that would benefit some small businesses are now up for vote. These bills, while they do provide permanent tax extensions, are controversial because they don’t offset the cost of the tax breaks.

H.R. 644, a tax extender bill which makes permanent the tax deduction for charitable contributions of food by any trade or business, and for charitable contributions by individuals and corporations of real property interests for conservation purposes, has passed the House and is now being considered by the Senate. 

H.R. 636 makes permanent a $500,000 allowance for the expensing of depreciable business property and the $2 million threshold, and makes permanent a deduction for computer software and qualified real property. It also makes permanent a reduction (from 10 years to 5 years) of the period during which the built-in gains of an S corporation are subject to tax, and makes permanent the tax rule requiring a decrease in the basis of a shareholder’s stock in an S corporation that makes tax deductible charitable contributions of property. This bill has also passed the House and is being considered by the Senate.

The President is threatening a veto if the bills are passed, because neither bill makes any provision to offset the costs of the tax breaks, which would add $79 billion to the federal deficit in the next 10 years. While the President supports tax incentives for small business and has proposed small business incentives in his budget, he is against these bills in their current form.

White House Statement of Administration Policy said, ”House Republicans are making clear their priorities by rushing to make these tax cuts permanent without offsets when key tax credit improvements benefiting 16 million working families with children are scheduled to expire.”Another White House Statement asserted, “They are also seeking to impose a double standard by adding to the deficit to continue and create tax breaks that primarily benefit higher-income individuals, after insisting on offsetting the cost of measures that help middle-class and working Americans, such as the extension of emergency unemployment benefits.”

Looks like we aren’t going to be getting anywhere without some cooperation.