Committee on Ways and Means
Thank you, Mr. Chairman. I'm pleased that you've called this hearing today to examine the 2011 and 2012 tax extenders. However, I must note my frustration that Congress has once again allowed so many of these important tax provisions to expire. I'm also discouraged that we're just now examining the 2011 extenders even though they expired several months ago. Important principles of tax policy are certainty and predictability. We need to remember these principles as we deal with tax extenders.
Many of the tax provisions that expired in 2011 are priorities of mine - for example, the New Markets Tax Credit and Build America Bonds are very important. The NMTC is designed to stimulate investment and economic growth in low-income communities that are traditionally overlooked by conventional capital markets. And we've seen the results in all of our districts. In Western Massachusetts, local NMTC success stories include small business like the River Valley Market in Northampton and the Massachusetts Green High Performance Computing Center in Holyoke. We need to extend the NMTC.
Another important provision that expired last year is the 15-year depreciation schedule for leasehold improvements, restaurant improvements and new construction and retail improvements. Mama Iguana's is a restaurant that opened last year in Springfield and took advantage of this provision. We need to extend the 15-year depreciation provision and eliminate any tax law prejudices against retail store owners.
Mr. Chairman, it also is absolutely essential that the active financing rules of Subpart F, which expired at the end of last year, be extended. This is an issue that the two of us have worked on and a bipartisan majority of this committee has cosponsored our legislation to make these rules permanent. The active financing rules are not a special incentive. Rather, they allow U.S. banks, insurance companies and finance companies to apply the regular U.S. tax law allowing for the deferral of US taxes on active foreign business income. And speaking of Subpart F, another important provision that we need to extend is the Look-Through Rule.
The R&D tax credit is a huge priority for many businesses in Massachusetts. In fact, Massachusetts is ranked third in the country in terms of the number of companies in the state reporting R&D activity. The R&D credit must be extended. Another extender that is important to Massachusetts - the 2012 AMT patch. About 975,000 families in Massachusetts, including about 80,000 in my district in Springfield, will be hit with the AMT if we don't enact a patch for 2012.
A few additional extenders that are extremely important and should be extended are:
- Section 25C, which is a tax incentive for the purchase of energy efficient improvements to homes;
- Section 181, which is effectively a limited form of bonus depreciation to encourage domestic film production and job creation;
- The extenders related to regulated investment companies, or RICs; and
- The enhanced charitable deduction for contributions of food inventory.
In terms of 2012 extenders, we also must extend Section 127 which allows an employee to exclude from income up to $5,250 per year for tuition assistance from their employer. Furthermore, the Production Tax Credit for on-shore wind and the Investment Tax Credit for off-shore wind are important and we should extend both provisions.
Mr. Chairman, thank you again for calling this important hearing. I look forward to working with you to extend these important provisions.
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