Senate Finance Committee Chairman Ron Wyden, D-Ore., said Wednesday that he plans to “move quickly” to extend a number of expiring tax provisions, including the research and development credit.
Over the long term, “that credit, through comprehensive tax reform, could be made even more useful for American startups,” he said. “Investment in innovation and research can help turn creative startups into thriving businesses with more good-paying, high-skill jobs.”
A Senate Finance spokesperson told ThinkAdvisor that there were “no decisions yet” on which other tax provisions to extend.
Wyden made his comments during a hearing to discuss President Barack Obama’s fiscal 2015 budget, which was released Tuesday, with Treasury Secretary Jacob Lew.
Wyden said that “every one of our big economic challenges depends on sustaining and growing the middle class,” and that extending the research and development tax credit was just one way to do that.
While Obama’s budget includes a proposal for business tax reform, Wyden said that a “broader approach” that “comprehensively overhauls our broken, dysfunctional code would do more to give all Americans, especially in the middle class, the opportunity to get ahead.” He said his committee would work “in a bipartisan way and with the administration closely” on comprehensive tax reform, though he questioned how to reach bipartisan “common ground” in order to move forward.
As to the nation’s fiscal condition, Lew told members of the Senate Finance Committee that under the $3.9 trillion 2015 budget, the deficit will decline to less than 2% of GDP by 2024. “Debt held by the public as a share of the economy will stabilize in FY 2015 and decline steadily thereafter until the end of the forecast horizon to 69% of GDP in 2024,” he said.
While the economy has grown at an average rate of 2.3% since the recession, last year it grew 2.5%, Lew told lawmakers. “Since February 2010, when the economy began producing jobs again, we have added 8.5 million new private-sector jobs, including 2.3 million over the past year. The housing market, which was the locus of much of the distress in the economy, is now rebounding.”
Both Sens. Rob Portman, R-Ohio, and ranking member Orrin Hatch, R-Utah, balked at the budget’s $1 trillion in new tax hikes.
Because the “vast majorities of savings” are delivered through the tax system, Wyden said that it’s time for “fresh policies that give all Americans the opportunity to accumulate wealth.” While he applauded the administration’s myRA, and the budget’s inclusion of an auto-IRA plan, he said another idea “that needs to be examined” is establishing a savings account for every American child. This idea, he said, “has had deep conservative roots and significant bipartisan support. The idea of helping young people, particularly ones of modest income, be part of the opportunity to accumulate wealth in this country is especially important, and such accounts can open doors to higher education, homeownership and retirement security.”
Lew added that myRA is a good idea because the nation’s “challenge in terms of retirement savings is getting people started and making [retirement savings] a habit.” Said Lew: “Too many people wait too long” to start saving.
Wyden also noted that during his chairmanship, his committee would focus on education, “another area where the tax code doesn’t pass the smell test.”
He noted the 15 separate incentives to help defray the cost of an education, each having “its own set of mind-numbing rules and definitions.” Wyden noted that “There are ways to improve those incentives — not just in the short term, but for the long haul through real tax reform — so that more Americans can secure the economic mobility that an affordable, high-quality education can give.”
Check out SEC Gets 26% Funding Boost Under Obama’s 2015 Budget on ThinkAdvisor.