The House on Friday passed a bill that would cut taxes for businesses and increase the annual deficit by $77 billion over the next decade, according to the Congressional Budget Office.
Despite their constant hand-wringing about the national debt, the legislation was carried by Republicans in a 272-142 vote split almost entirely along party lines. Thirty-three democrats voted for the measure, and one Republican, Rep. Walter Jones (R-N.C.) voted against it.
The bill would permanently increase business investment deductions to $500,000 from $25,000.
“That change would allow firms to deduct immediately from their taxable income larger amounts of investment instead of spreading those deductions out over time,” the CBO noted.
While many Democrats support this policy in principle, they take issue with the fact that it isn’t paid for through more sweeping tax reform.
The CBO said that, if enacted into law, the initiative would add roughly one percentage point to federal deficits between 2015 and 2025.
It is likely the bill will gain some traction in the Republican-controlled Senate. According to Maplight, no influence-peddling organizations currently oppose the initiative, while it is backed by eight, including consistently right-wing institutions like Grover Norquist’s Americans for Tax Reform and the National Federation of Independent Businesses.
Rep. Sandy Levin (D-Mich.), the ranking member of the House Committee on Ways and Means, said the bill could be used as a vehicle for Republicans looking to take small business tax cuts off the table in the tax reform debate.
By using it to drive up the national debt, he said, Republicans could use the bill to “take a hatchet” to welfare programs when it comes time to debate the tax code.
“It will likely be part of any tax reform,” Levin remarked from the House floor on Friday. “And until then, it will be renewed. That is certain. Republicans control this House and they control when renewal would occur absent tax reform.”
Levin denounced his conservative colleagues for ignoring a sweeping proposal offered last Congress by one of their own, former Ways and Means Committee Chair Dave Camp (R-Mich.). Camp called for similar tax breaks that would be paid for by higher levies on the rich and banks–proposals “that drew cringes from his fellow Republicans,” Levin said.
“He paid for making permanent tax provisions like the bill before us today–the single piece of legislation costing us about $80 billion,” Levin remarked. “Like it or not, it was at least somewhat honest accounting. So started a Republican ploy to get around the hard realities of tax reform.”
