Republicans and many Democrats want to make permanent the research tax credit, which was first enacted in 1981. Other breaks being considered for permanent status include a provision letting small businesses write off more capital investments immediately, a state sales tax deduction and a tuition tax credit.

Child Credit

Democrats are focused on expansions of the child tax credit and earned income tax credit, which expire at the end of 2017, along with the production tax credit for wind energy.

Earlier this year, the House passed an expansion and extension of the research credit that would cost the U.S. government $155.5 billion over a decade in forgone revenue. On that vote, 62 Democrats joined 212 Republicans to back the bill.

Most of the tax breaks expired at the end of 2013, though those for low-income and middle-income families don’t lapse until the end of 2017. Democrats are trying to secure permanent extensions of those items in the negotiations.

The talks may fall apart because of divides over which policies deserve extensions and because the measure could add more than $400 billion to the deficit over the next decade.

‘Christmas Tree’

“A lame-duck Christmas tree bill that extends and expands everyone’s favorite tax break without offsets would represent exactly the wrong direction for tax and fiscal policy, undermining much of the progress made so far,” the Committee for a Responsible Federal Budget said in a blog post yesterday.

In the past, Republicans have criticized the lack of rules to prevent undocumented immigrants from receiving the child tax credit as well as error rates in the earned income credit.

The Obama administration has opposed permanent extensions of business breaks.

Camp wouldn’t discuss details of the discussions among lawmakers and staff members. Camp, a Michigan Republican who unsuccessfully sought to advance a revision of the U.S. tax code this year, said he is trying to attach some permanent policies to the short-term extensions and that he’s willing to compromise to make that happen.

His alternate plan is a one-year retroactive extension of the lapsed tax breaks. That would set all of the breaks to expire in just a few weeks at the end of 2014 and require Congress to address the issue again next year.