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1 Kyle Pomerleau, Temporary Policy in the Federal Tax Code 1 (2019)

handle is hein.taxfoundation/tempftx0001 and id is 1 raw text is: Mar. 2019 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. @2019 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Temporary Policy in the Federal Tax Code Written Testimony for the House Ways and Means Committee Kyle Pomerleau Chief Economist and Vice President of Economic Analysis Chairman Thompson, Ranking Member Smith, and members of the Committee, thank you for the opportunity to speak to you today about temporary tax policy in the Internal Revenue Code. The Tax Foundation is the nation's oldest organization dedicated to promoting economically sound tax policy at the federal, state, and local levels of government. We are a nonpartisan 501(c)(3) organization. For more than 80 years, the Tax Foundation's research has been guided by the immutable principles of sound tax policy which say that taxes should be neutral to economic decision-making, and that they should be simple, transparent, and stable. Today, I want to discuss the important tax policy principle of stability. Taxpayers deserve consistency and predictability in their tax code, and as such, governments should avoid enacting temporary or retroactive tax laws. Stability is also important for the success of any tax policy. A policy that may otherwise produce economic growth or other positive benefits may fail if the policy is temporary or is seen as temporary by taxpayers. For more than a decade, a collection of temporary, narrowly targeted tax provisions for individuals and businesses have routinely expired and then been temporarily reauthorized, earning the nickname of tax extenders. Extending these provisions, especially retroactively, would not contribute to economic growth and would simply be a windfall to taxpayers. The best course of action for the majority of these narrow, temporary tax policies would be for Congress to allow them to expire permanently. Besides extenders, there are major portions of the Internal Revenue Code that are set to change or expire over the next decade. This is due to the temporary nature of much of the Tax Cuts and Jobs Act. These temporary provisions frontload some of the anticipated economic growth, but because they expire, they do not contribute to the long-run economy. While it was not ideal to make significant portions of the TCJA temporary, there is now an opportunity for lawmakers to evaluate different aspects of the TCJA and

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