Business Tax Breaks Advance

House Ways and Means Committee approves $310 billion of tax benefits after squabble.

The U.S. House Ways and Means Committee approved $310 billion of tax breaks as Republicans defeated Democratic objections to the plan’s budgetary costs.

The tax breaks, many of which benefit companies such as Intel Corp. and General Electric Co., have bipartisan support. How and whether to offset their cost remains an area of dispute, which prompted some Democrats to vote against bills they cosponsored earlier this month.

The Republicans’ proposal would make the tax benefits permanent, ending the lapse-and-revive cycle that has persisted for years. The six breaks whose extension was approved today and dozens of others expired Dec. 31. The move separates some of the breaks from Republicans’ broader goal of revamping the U.S. tax code.

“We have to start somewhere,” said Ways and Means Committee Chairman Dave Camp, a Michigan Republican. “We’re starting with bills that have had bipartisan sponsors.”

Democrats argued that the Republican plan is fiscally irresponsible, because it doesn’t include offsetting spending cuts or tax increases, and unfair as Republicans maintain that the cost of extending unemployment benefits should be covered.

They also complained about the uncertain fate of other tax breaks, such as those for hiring workers from disadvantaged groups and installing wind turbines.

“To say that Republican action today is hypocritical is a serious understatement,” said Representative Sander Levin of Michigan, the top Democrat on the Ways and Means Committee.

Democrats didn’t offer specific proposals for offsetting the costs. In the past, they have supported higher taxes for oil companies and private equity managers to pay for extensions. The provisions have repeatedly been extended without those revenue-raising items attached, most recently in January 2013.

The panel voted 22-12 today to endorse the permanent extension of the research credit, which has existed since 1981 and has never been made permanent.

One Democrat, Representative Earl Blumenauer of Oregon, voted with the Republicans. Two others -- Linda Sanchez of California and John Larson of Connecticut -- voted no, even though they cosponsored the bill.

 

GE, Citigroup

Beyond the research credit, the committee approved a proposal to make permanent the active financing exception. That rule, supported by GE and banks such as Citigroup Inc., lets companies defer U.S. taxation on income they earn from finance businesses outside the country.

Other breaks endorsed today include a rule that lets small businesses write off some capital expenses and another that allows multinational companies to move money easily between subsidiaries overseas.

Other than the research credit, the bills were passed on party-line votes.

The Senate Finance Committee, controlled by Democrats, voted earlier this month to extend almost all the expired breaks through 2015. That bill contained no offsetting spending cuts or tax increases.

The bills under consideration are H.R. 4429, H.R. 4438, H.R. 4453, H.R. 4454, H.R. 4457 and HR 4464.

 

Bloomberg News

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments

Advertisement. Closing in 15 seconds.