House committee clears tax breaks

The House Ways and Means Committee voted Wednesday to permanently install seven tax breaks, including incentives for small businesses and charitable contributions.

{mosads}The measures passed the Republican-led panel on a party-line vote – but the disagreement wasn’t over the tax breaks themselves, which have broad support in both parties. Instead, Democrats complained that the tax breaks would add some $93 billion to the deficit, and would hamper negotiations over tax reform.

House Ways and Means Chairman Paul Ryan (R-Wis.) disagreed, saying that the tax committee could work on tax reform while giving more certainty to taxpayers. He added that, unlike Democrats, Republicans didn’t believe that lawmakers needed to find offsets to help out taxpayers.

“That’s where we don’t see the logic,” Ryan said. “Who’s money is this? I’d argue it’s the taxpayer’s money.”

Restoring the tax break that allows small businesses to more quickly write off investments costs around $77 billion over a decade on its own.

The other six incentives preferences for contributions of food, preserving land for conservation, and donations from retirement accounts, as well as other provisions helping small businesses.

Rep. Joe Crowley (N.Y.), a member of Democratic leadership, said the GOP push for the tax breaks suggested they believe in the “tax fairy.”

“Maybe one that instead of leaving a quarter under your pillow for a tooth, will leave $8.8 billion under your pillow for this particular tax expenditure?” Crowley said.

Most of the tax breaks expired at the end of 2014, and have historically been brought back on a start-and-stop basis. The House will vote this month on the permanent extensions of at least some of those provisions, after taking similar votes last year.

The mark-up of the tax bills came just days after the Obama administration rolled out new proposals seeking to spark negotiations over reforming the tax code for U.S. businesses.

Ryan reiterated Wednesday that he wanted to work with the Obama administration on that front. But if the House waited to act on expired tax breaks, Congress would likely be waiting until the last minute – December – to act on restoring the incentives, Republicans said.

“I think we can go down two tracks simultaneously,” Ryan said.

For their part, Democrats noted that former House Ways and Means Chairman Dave Camp (R-Mich.) had delayed moving on the tax breaks, commonly known as extenders, in the last Congress until the chances for tax reform appeared dim. Democrats suggested taking that approach again, and also noted that Republicans weren’t rushing to extend incentives like the Earned Income Tax Credit that help the working poor.

“Some of us really would like to have a tax reform compromise come out of here, and we hate to see pieces that could be sweeteners for somebody or other given away,” said Rep. Jim McDermott (D-Wash.). “I don’t know anybody in their right mind who would vote against these as a policy issue.”