EDITORIAL: Federal budget package has plenty to like, and plenty of waste

The U.S. Capitol already has a Christmas tree, but Congress just created a second one for good measure. A $650 billion package of tax cuts, credits and “extenders” passed the House on Thursday, and a $1.1 trillion spending plan that would keep Washington funded through September is expected to pass today. Combined, the two bills have more glittering decorations and gifts than any evergreen anywhere.

Nevadans were on Santa’s “nice” list. The best present, hands down, was the permanent extension of the federal deduction for state and local sales taxes.

After being repealed in 1986, the sales tax deduction was reinstated in 2004, but with a significant change: Instead of allowing Americans to deduct both their state income and sales taxes, as they could through 1986, Congress forced Americans to choose one levy or the other. The deduction had been reauthorized every other year since, allowed to die before being resurrected and extended.

Nevada is one of seven states that do not have any kind of income tax and fund government largely through sales taxes. About a quarter of the state’s taxpayers have claimed the deduction previously. Allowing the sales tax deduction to expire, while letting residents of states with income taxes retain that break, would have been grossly unfair, because residents of states that have no income tax suddenly would bear a disproportionate share of the federal tax burden.

Thanks to the tax extender bill, the biennial uncertainty surrounding the sales tax deduction finally dies. Hallelujah.

The current earned income tax credit and child tax credit, which were increased in 2009 to provide American families some relief during the Great Recession, will be made permanent, as will deductions for small business expensing and teacher-purchased classroom supplies. And lawmakers provided a two-year extension of the tax waiver for homeowners who receive principal reductions on underwater mortgages or complete short sales of their homes, which means they can’t be taxed on whatever relief they received this year or might receive next year. About 19 percent of Nevada mortgages are still underwater, the highest rate in the nation. Government interventions have slowed the housing recovery. Here’s hoping this extension of the housing tax break is the last.

As part of a broad compromise between the two major parties, which required the tax extenders and spending plan to be split into two bills, Democrats gained a five-year extension of tax credits for wind, solar, geothermal and the rest of the renewable sector. Thus, the mature green energy industry won’t have to stand on its own until the end of this decade at the soonest. Talk about coddling. However, the compromise also includes the end of the country’s 40-year ban on domestic oil exports, a provision vital to saving American oil jobs at a time of low crude prices and oversupply.

Sen. Dean Heller, R-Nev., had hoped to win the permanent repeal of Obamacare’s so-called “Cadillac tax,” the 40 percent excise tax on employer-provided medical benefits worth more than $10,200 for individuals and $27,500 for families, a threshold that hits middle-class households. Instead, he’ll have to settle for a two-year delay to its introduction. As a result, the tax, already pushed back once before, won’t take effect until 2020. And Obamacare’s job-killing medical device tax will be suspended for two years. Remember all the Democratic Party taunting about Obamacare being “the law of the land”? Curiously, those taunts have stopped — just ahead of an election year.

Another gift to Nevada and the rest of the West: language that prohibits the federal government from listing the sage grouse as an endangered species while nearly quadrupling Bureau of Land Management spending on habitat conservation. The government’s current sage grouse preservation plan remains unnecessarily burdensome to states and industry trying to put public lands to economically productive use, but the omnibus bill ensures it can’t get worse — and that the Interior Department can’t retaliate against Nevada for suing over the provisions of that preservation plan.

We’d much rather see Congress simplify the Byzantine federal income tax code by reducing rates and eliminating deductions, but making more of the existing code permanent is better for the economy in the interim. And it’s quite the Christmas gift to see President Barack Obama agree to so many Republican demands, most notably Obamacare rollbacks and the end of the oil export ban. After all, this is the president who killed the Keystone XL pipeline earlier this year.

Motivated by a desire to go home for the holidays, lawmakers this week did what they do best: pile every bit of unfinished business into massive bills too big to read to make up for their own procrastination. We wish they’d adopt a simple New Year’s resolution: Less is more.

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