House GOP Pushes Tax Cuts Despite Veto Threat Over Costs

WASHINGTON (AP) — House Republicans are advancing a series of tax cuts this week affecting millions of businesses and individuals, despite White House veto threats over adding more than $300 billion to the budget deficit over the next decade.

         The debate highlights a dispute between Republicans and Democrats over whether tax cuts should be offset by spending cuts or other revenue increases, making it difficult to enact even popular tax breaks for businesses and families.

         One small provision would expand the same college savings plans that President Barack Obama unsuccessfully tried to scale back. Others would make a series of expired tax breaks permanent, including ones that encourage charitable giving and others that make it easier for businesses to invest in new equipment or research and development.

         "We are fighting to get people back to work, to get the economy moving, to increase take-home pay and to give businesses as many incentives as we can to get people back to work," said Rep. Paul Ryan, R-Wisc., chairman of the tax-writing House Ways and Means Committee. "That's what this is all about."

         Many Democrats said they support the tax breaks, but they oppose adding so much to the budget deficit.

         "We may have the same objective, but we want to pay for it," said Rep. Bill Pascrell Jr., D-N.J. "Somebody's got to pay the bill."

         The House voted Thursday to pass a $14.3 billion package of tax breaks designed to encourage charitable giving. One provision offers tax breaks to people who make charitable contributions from individual retirement accounts. Another provides tax breaks for donating property for conservation, and a third expands tax breaks to businesses that donate food inventory.

         All three provisions are part of a package of temporary tax breaks that expired at the start of the year. The House bill would make them permanent.

         The bill passed by a vote of 279 to 137. Thirty-nine Democrats joined nearly every Republican in voting for the bill.

         The margin was big enough to override a presidential veto, though not every member voted. If all 433 House members voted (there are two vacancies), it would take 289 votes to override a veto.

         In its veto message, the White House said it supports efforts to encourage charitable giving. But, the statement said, House Republicans are imposing "a double standard by adding to the deficit to continue and create tax breaks that primarily benefit higher-income individuals, after insisting on offsetting the cost of measures that help middle-class and working Americans, such as the extension of emergency unemployment benefits."

         Republicans countered that lawmakers from both political parties have repeatedly voted to extend many of these tax breaks on a temporary basis.

         "We don't believe that keeping the tax code as it is should require you to raise taxes on other Americans or other businesses," said Rep. Kevin Brady, R-Texas. "It seems disingenuous to say if we extend it for one-year, it costs nothing. But if we make it permanent and recognize that these are key, critical, truly permanent parts of our tax code, that that somehow is fiscally irresponsible."

         Earlier Thursday, the House Ways and Means Committee approved three tax bills that are expected to reach the House floor after Congress returns from a weeklong break next week. One would expand 529 college savings plans to allow students to use funds from the accounts to buy computers and other technology.

         Under current law, students can't use tax-free distributions from the account to buy computers. Ryan said the bill simply modernizes the accounts to reflect the needs of today's college students.

         In his State of the Union Address, Obama proposed scaling back the tax benefits of 529 college savings plans as part of a package that would simplify a sometimes confusing array of tax breaks for college students. But Obama withdrew his proposal after both Republicans and Democrats panned it.

         The Ways and Means Committee passed the bill by voice vote. The bill would add $51 million to the budget deficit over the next decade, according to the Joint Committee on Taxation, which provides official estimates for Congress.

         The committee also passed two other bills on party-line votes, with Republicans in favor and Democrats opposed.

         One would make permanent a business tax credit for research and development. The other would make permanent a federal tax deduction for state and local sales taxes. This bill helps people in states without state income taxes.

         Both tax breaks have been extended many times, though they were allowed to expire at the start of the year. Making the research tax credit permanent would add $182 billion to the budget deficit over the next decade. Making the sales tax deduction permanent would add $42 billion to the deficit.

         On Friday, the House is scheduled to vote on a package of tax breaks that enables small businesses to more quickly write off equipment purchases and other expenses. It would add about $79 billion to the budget deficit over the next decade.

         – by AP Reporter Stephen Ohlemacher




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