By Bernie Becker - 05/29/14 01:41 PM EDT
House GOP tax writers pushed through a $287 billion tax break for business write-offs on Thursday, beating back Democratic protests that the extension was both fiscally reckless and pointless.
Ways and Means Committee Chairman Dave Camp (R-Mich.) said the measure's built on his approach of extending important tax preferences for the long term, and would give an “incremental” boost to his broader goal of tax reform.
Bonus depreciation and three of the charitable provisions were among the more than 50 tax breaks, commonly known as extenders, that expired at the end of 2013.
Unlike Camp, Senate Finance Committee Chairman Ron WydenRon WydenOvernight Finance: McConnell offers 'clean' funding bill | Dems pan proposal | Flint aid, internet measure not included | More heat for Wells Fargo | New concerns on investor visas US wins aerospace subsidies trade case over the EU Wells CEO Stumpf resigns from Fed advisory panel MORE (D-Ore.) is pushing to extend most of those preferences for two years, which is more in line with how Congress has generally handled the incentives.
“They are happy with temporary policy,” Camp said at Thursday’s markup. “I am not.”
Democrats on the Ways and Means panel balked at the extensions on Thursday, as they mostly did last month when the committee extended six other expired tax breaks, including the credit for business research and development.
The full House passed the research credit this month, with the support of more than 60 Democrats.
As with the research tax break, Democrats said they generally supported the incentives considered by the committee.
But none of them voted for any of the tax breaks, insisting they couldn’t get on board with clearing another slate of tax breaks that would add more than $300 billion to the deficit. In all, the dozen preferences approved by the Ways and Means panel over the last four weeks cost $600 billion over a decade.
Instead, Democrats sought to both extend some of the incentives for two years, or to pay for extensions by limiting preferences used by major oil companies.
“The policy is not in dispute,” said Rep. Richard Neal (D-Mass.). “The process is.”
Democrats also suggested that Thursday’s markup was a waste of time, given that Wyden and the Senate are seeking another round of short-term extensions.
Senate Republicans generally support the extender package from Wyden and Sen. Orrin Hatch (R-Utah) but have blocked the measure to protest Democrats’ handling of amendments and floor procedure.
Democrats on the Ways and Means panel predicted Thursday that the Senate would have no interest in the House’s permanent extensions and said the proposals illustrated how little traction Camp’s tax reform draft from February has received.
“We’re going through the motions here,” said Rep. Sandy Levin (Mich.), the committee's top Democrat.
Under bonus depreciation, companies are allowed to tack an extra 50 percent on top of the normal write-offs they are allowed for certain capital investments.
The tax break was first put into place two separate times by the George W. Bush administration after the 9/11 attacks and as the economy floundered in 2008. Bonus depreciation was then extended under President Obama's watch.
On Thursday, the committee also restored tax breaks for land owners who conserve their land, people who donate to charity from retirement accounts and companies that donate food to charities.
The panel also cleared two new tax breaks, one to allow taxpayers to deduct charitable donations made until April 15 on the previous year’s tax return. The other would slice taxes for private foundations.
Business groups like the Chamber of Commerce and the National Association of Manufacturers said the extension of bonus depreciation would “spur much needed economic growth and jobs.”
Rep. Patrick Tiberi (R-Ohio), the measure’s sponsor, said Thursday’s estimate that the economy actually contracted in the first three months of the year underscored the need for bonus depreciation and asserted the tax break would end up paying for itself.
Liberal groups and deficit hawks opposed the extension of bonus depreciation, which the Congressional Research Service (CRS) says cuts the effective tax rate for equipment from 26 percent to 15 percent.
Levin also pointed to the CRS’s conclusion that bonus depreciation’s “temporary nature is critical to its effectiveness,” while Democrats pointed out that Camp actually slowed down depreciation schedules in his tax reform draft this winter.
Camp has sought to extend certain tax breaks permanently, as a way to help spur momentum for tax reform.
House GOP tax writers have said they want the Senate to act quickly on Wyden’s tax extender measure, believing it will give them a better chance to get some of the preferences enacted permanently.
Even though the Senate has yet to show any interest in his approach, Camp also warned that Republicans wouldn’t just fall in line behind temporary extensions, as Democrats predicted on Thursday.
“I think we have an opportunity to make some very critical tax policies permanent,” Camp said. “I don’t believe the House is going to simply rubber stamp the Senate.”