Committee's Failure Puts Tax Agenda on Congress
Political Insider
The failure of the Joint Select Committee on Deficit Reduction (Super Committee) to agree on a deficit reduction and tax reform plan means Congress now faces a number of important tax provisions set to expire at the end of the year, some of which could stress multifamily firms’ rent revenue streams by affecting residents’ abilities to pay.
The most notable are the one-year Social Security payroll tax cut and the Alternative Minimum Tax (AMT). Given the still fragile state of the economy, lawmakers are expected to retain the payroll tax cut after navigating disputes over how to offset the $120 billion cost.
They are also expected to extend the so-called AMT patch to shield nearly 30 million taxpayers from this onerous and supplemental levy. However, as has been the case in past years, they may not do so until early 2012.
Of additional interest to NAA/NMHC are the approximately five dozen business provisions set to expire on Dec. 31. They include a number of energy efficiency incentives, immediate expensing of brownfield remediation costs and the
New Markets Tax Credit.
In the past, Congress has extended these for one to two years; however, as with the AMT patch, lawmakers have often failed to act before they expire and have extended them retroactively.
Bonus depreciation is also on the radar. A temporary incentive allowing businesses to immediately write off 100 percent of the cost of qualifying property, including building components (but not the building itself), falls to 50 percent in 2012. It is unclear whether Congress might act to retain the 100 percent bonus depreciation in an effort to stimulate capital investment.
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