Congress Could Approve More Than $600 Billion in Tax Cuts Today
The dome of the U.S. Capitol building is illuminated before sunrise in Washington, D.C., U.S., on Friday, Dec. 11, 2015. The Senate passed a stopgap measure on Thursday to avoid a potential U.S. government shutdown this weekend, as talks continue on a $1.1 trillion spending plan and a separate measure to revive dozens of tax breaks. Photographer: Drew Angerer/Bloomberg via Getty ImagesPhotograph by Bloomberg
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Businesses would get billions of dollars in tax assistance on a permanent basis, while middle-class Americans would make gains too, under a $680-billion tax package hurtling toward approval with bipartisan support in the U.S. Congress on Wednesday.
In the closest thing to a grand bargain on taxes in years, the package would be a major win for corporate lobbyists and Republicans. It would also offer aid to low-income parents, students, teachers and others, attracting Democrats’ support.
The House of Representatives was slated to vote on the package on Thursday, and the Senate as soon as Friday. It would then go to President Barack Obama, a Democrat. The White House issued a statement on Wednesday in support of the package.
In a move that was helping to overcome disputes that have frustrated previous attempts to overhaul the same tax provisions, the package was being closely linked procedurally in Congress to a $1.1-trillion spending bill that must be approved within days to avert a government shutdown.
Republican House Speaker Paul Ryan, formerly the chairman of the House tax committee, called the tax package a “huge win for families, for job creators, for certainty for our economy.”
The largest and costliest component of it would be making the business research and development (R&D) tax credit permanent, costing taxpayers $113 billion over 10 years.
The R&D credit is now subject to periodic congressional review as part of a list of “temporary” tax breaks known as the “extenders” that Congress has routinely renewed for years.
Like the R&D credit, other business tax breaks would be made permanent, including one on business depreciation, with a 10-year cost of $28 billion; one on “active financing” that lets businesses shelter profits overseas, costing $78 billion; and one on business expensing, costing $77 billion.
In addition, “extenders” items geared to middle-class Americans would also be made permanent, including the child tax credit, costing $87 billion; the American Opportunity tax credit for college students, costing $80 billion; and the earned income credit for low-income wage earners, costing $30 billion.
Congress’s Joint Committee on Taxation said the tax provisions in the package and the spending bill would increase U.S. Budget deficits by around $680 billion over 10 years.
House Democratic Leader Nancy Pelosi said the deal was driven by Republicans and “practically an immorality” because it includes massive “giveaways” to special interests and big corporations with no offsetting savings.