Less than two weeks after the end of the debt limit fight that Republicans said they started because they worried about government red ink, House Republicans moved a step closer to possibly adding as much as a trillion dollars more in debt through tax cuts.
The tax-writing House Ways and Means Committee late Tuesday approved a trio of bills that would extend or expand parts of the Trump tax cuts from 2017 and take back green energy tax cuts included in last year’s Inflation Reduction Act.
While the nonpartisan Joint Committee on Taxation estimated the bills together would cost only around $20 billion through 2033, an anti-budget deficit group says the price tag would be closer to $1 trillion if the tax cuts were made permanent, as happened with almost all of the George W. Bush-era tax cuts.
“We estimate that the plan would cost over $1.1 trillion ($950 billion without interest) through 2033 if these temporary tax cuts and extensions were made permanent,” the Committee for a Responsible Federal Budget said Friday.
The bills are unlikely to make it through the Senate and serve more as markers for future tax fights. But coming so soon after the debt limit standoff, they leave Republicans open to charges of budget deficit hypocrisy.
“We estimate that the plan would cost over $1.1 trillion ($950 billion without interest) through 2033 if these temporary tax cuts and extensions were made permanent.”
– The Committee for a Responsible Federal Budget
Asked about the disconnect between threatening default in the debt limit fight, which ended June 3 with President Joe Biden signing a bill suspending the limit until 2025, and potentially adding massively to the debt, House Speaker Kevin McCarthy told reporters Monday the problem was spending, not revenues.
“I look at it from the perspective of that if Washington is not taking your money, it’s much more efficient used by you,” he said.
Rep. Jason Smith (R-Mo.), the chairman of the Ways and Means Committee, said Republicans had been vindicated about the 2017 Tax Cuts and Jobs Act tax bill by the pace of economic growth and revenues since then.
“Let’s set the record straight: TCJA delivered exactly what was promised ― tax cuts for families, more jobs and a growing economy,” he said.
“I look at it from the perspective of that if Washington is not taking your money, it’s much more efficient used by you.”
– House Speaker Kevin McCarthy (R-Calif.)
Democrats at the markup focused on the shift in priorities among Republicans and its speed.
“Ten days ago, to the floor of the House of Representatives, they threatened the full faith and credit of the United States because of the debt that they helped add to the problem” through the 2017 tax bill, said Rep. Rich Neal (D-Mass.), the top Democrat on the panel.
“So they get to set the fire with the tax cut that borrowed money, and then, with the debt ceiling, call the fire department? Because that’s the real issue here today that’s in dispute.”
“Republicans are back to the single issue that makes their party: tax cuts for the rich,” said Rep. Bill Pascrell (D-N.J.).
Pascrell said he had asked his staff to name some of the worst movie sequels in history, for reference.
“Somehow, the other side’s tax scam’s 2.0 is worse than ‘Police Academy 4.’ I’ve come to that conclusion,” he said.
The package consists of three bills. The biggest one would extend tax breaks for research and development and business equipment depreciation, and also repeal the Superfund tax on companies that pay for environmental cleanups. It would pay for those changes by repealing clean electricity and electric vehicle tax breaks, raising revenues overall by $156.9 billion through 2033.
Another bill would extend a tax break for publicly-traded companies to small businesses with stock known as “S corporations” and make it easier to write off new equipment costs. It would cost about $81 billion. A third bill would add a $2,000 income tax deduction for singles and a $4,000 one for couples that jointly file their taxes, limited by income, and make the deduction available through the end of 2025. It was scored by the JCT at about $96.4 billion.
“Republicans are back to the single issue that makes their party: tax cuts for the rich.”
– Rep. Bill Pascrell (D-N.J.)
Republicans see the extensions as necessary because in 2017, to be able to lower both companies and individuals’ taxes, GOP lawmakers had to agree to make many provisions temporary. The nonpartisan Congressional Budget Office said extending the individual income tax cuts past 2025 and through 2033 would cost about $2.8 trillion just by themselves.
“While the Ways and Means Committee should be commended for identifying offsets, their reliance on arbitrary expirations to hold down the bill’s costs today suggests further costs in the future,” the CRFB said when the legislation was unveiled.
The group noted it had issued a similar warning about President Joe Biden’s original infrastructure proposal.
“As we explained before with regards to the Build Back Better legislation, ‘Arbitrary expirations don’t make policies cheaper, they just make them shorter.’”