The Senate late Tuesday overwhelmingly gave final congressional approval to reinstate more than 50 expired tax breaks, including the $1-a-gallon credit that subsidizes biodiesel.
The Tax Increase Prevention Act of 2014 extends certain expiring tax provisions relating to individuals, businesses and the energy sector. Other sections of the bill, such as the Section 179 expensing allowance gives farmers who have been waiting on before buying new tractors and other equipment so certainty.
Minnesota Soybean Growers Association President George Goblish was cautious in accessing the announcement.
“We really need a long-term plan, not a one year plan, Goblish said. He said the timing of the decision makes little sense because the year is almost over. “It’s really too bad they have to wait till the last hour on this when it should’ve been done a year ago.”
The so-called tax-extenders bill, which now goes to President Obama for his signature, also would revive a bonus appreciation allowance along with a series of tax incentives for wind energy and biofuels.
The tax breaks will expire again Dec. 31, because lawmakers were unable to reach a deal with President Obama for a longer-term extension. The bill, approved 76-16, was one of the last items left on the agenda of the lame-duck Senate.
In a victory for agricultural shippers, the Senate also rolled into the legislation a barge fuel-tax increase that would help pay for improvements to waterways including locks and dams on the Mississippi River. The 9 cent per gallon tax increase is matched by general revenue and is expected to raise about $80 million a year.
MSGA Vice President Paul Freeman said the barge fuel-tax increase it a boost to farmers and exporters.
“As products move into the world market, efficient and economical transportation has provided a competitive advantage for U. S. Products,” he said. “Part of the tax extenders under the ABLE act there are provisions to raise the barge fuel tax 9 cents. This long term vision shared by waterway shippers will help catch up on needed repairs and rebuilds on the waterway system, the most efficient and economical way to move bulk commodities. The barge fuel tax has been at 20 cents per gallon since 1995 and once the President signs the bill the fuel tax will go to 29 cent on April 1, 2015.”
Freeman said the timing of the barge fuel-tax couldn’t be better.
“This will be collected on the 12000 mile waterway system,” he said. “This comes at an important time when waterways have capacity for increased volume while truck and train movement seems to be having capacity issues.”
Sen. John Hoeven, R-N.D., went to the floor to read from letters constituents had sent him complaining about uncertainty created by the lapse in tax incentives, including the Section 179 allowance.
“If we don’t act, taxes will go up on hardworking Americans, on small businesses across this country, on farmers, and so we need to act,” Hoeven said.
The Section 179 provision would keep the expensing limitation at $500,000 for this year, the level that has been effect since 2010. Without the extension it reverts to $25,000. The provision costs the government about $1.4 billion.
The bill, H.R. 5771, also would reinstate a 50 percent bonus depreciation for the purchase of new capital assets, including farm equipment.
The wind industry’s tax credit would be reinstated for this year — at a cost of nearly $10 billion — but there has been discussion about eventually phasing it out.
The Association of Equipment Manufacturers, which includes Deere & Co., said the legislation was long overdue.
“Equipment manufacturers and their customers shouldn’t have to wait until mid-December to learn what their tax obligations were for virtually the entire preceeding year,” AEM President Dennis Slater said in a statement.
The legislation also includes one-year extensions of the second-generation biofuel production tax credit and the accelerated depreciation allowance for cellulosic biomass properties, as well as recently expired tax credits for alternative fuel vehicle refueling infrastructure and alternative fuel mixtures.
Bob Dinneen, president and CEO of the Renewable Fuels Association, called the package “a step in the right direction,” but noted that “comprehensive tax reform is also necessary because today’s legislation is a short term solution to a long term problem.”