House panel clears tax breaks

The House Ways and Means Committee on Thursday cleared seven separate bills to either permanently restore temporary tax breaks or tweak ObamaCare, most on party-line votes. 

The five tax breaks include incentives to allow companies to more quickly write off investments, preferences for multinational corporations on certain offshore incomes and a deduction for teachers that use their own money for school supplies.

{mosads}All five incentives expire at the end of 2015, and are among the more than 50 temporary tax breaks known as extenders around Washington. Extending the five breaks permanently would pile more than $410 billion on to the federal debt. More than two-thirds of that total, roughly $280 billion, comes from a provision known as bonus depreciation that allows companies to write off half of certain purchases immediately.

House Ways and Means Committee Chairman Paul Ryan (R-Wis.) and other GOP tax-writers said that extending the preferences for good would put an end to the start-and-stop negotiations over the temporary tax breaks, which expired at the end of 2014.

Republicans also brushed aside criticism from Democrats that they were being fiscally reckless, noting that the tax breaks are routinely extended on a short-term basis. The short-term extensions also mean that the tax incentives aren’t included in the official budget baseline, which is why putting them into place permanently adds to the debt.

“These are so-called ‘temporary’ provisions that we just happen to extend every year,” Ryan said. “This is exactly what our tax code should support. And making these provisions permanent will give people the certainty they need to create more opportunity in our economy.”

Democrats said that House Republicans had now added more than $1 trillion to deficits with their push to make the cuts permanent. The Ways and Means Committee has approved indefinite extensions of more than a dozen of the tax cuts, six of which have been passed by the full House. 

Rep. Sandy Levin (Mich.), the top Democrat on the tax-writing panel, told Republicans that the Thursday’s mark-up “rips the mask off your claims of fiscal responsibility.”

“Except a smile or a smirk, maybe,” Levin added.

In other action, the panel also approved a bill to expand the religious exemption from the Affordable Care Act’s mandate to purchase health insurance, in a measure that will mostly help Christian Scientists. The other healthcare proposal would allow people to use health savings accounts to buy over-the-the counter medications, a practice currently banned by the healthcare law. Both health measures were passed by voice vote.

The fate of the so-called extenders is currently up in the air, especially given a crowded fall schedule on Capitol Hill that also includes ensuring government funding, dealing with the nation’s borrowing authority and extending highway funding.

The Senate Finance Committee has taken a different approach to the temporary incentives, approving dozens of them for another two years during the summer.

President Obama has vowed to veto the permanent extensions because of the deficit impact, even though he and other Democrats often support the aim of the tax breaks. Obama and House Democrats also scuttled an emerging deal at the end of 2014 that would have made some of the preferences permanent.

But Senate Finance Committee Chairman Orrin Hatch (R-Utah) said Thursday that he was interested in having a conference committee with the House over the tax breaks.

“We’ve made it quite clear that we’re open, on our side, to making some of these items permanent,” Hatch said.

Asked about Obama’s opposition to that approach, Hatch responded that Republicans had been key partners with the White House on other recent economic issues, like trade.

“He may be growing up a little bit, because he’s had to work with people like me,” the Finance chairman said. 

This post was updated at 10:49 a.m. on Sept. 18, 2015 to clarify the vote totals for the measures.