House approves $622B tax plan

House approves $622B tax plan
© Greg Nash

The House on Thursday passed a sweeping $622 billion tax package, the first of two massive end-of-year measures Congress is rushing to conclude this week.

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The “tax extenders” bill was approved in a 318-109 vote, with 241 Republicans joining 77 Democrats in backing the measure.

Only 3 Republicans (Reps. Justin Amash (Mich.), Chris Collins (N.Y.) and Walter Jones (N.C.)) voted against the bill, which permanently renews a range of tax provisions following years of short-term extensions while extending other tax breaks through 2016 or 2019.

The House is expected to vote Friday on a $1.1 trillion omnibus spending measure that would fund the government through September 2016.

House Republicans were expected to provide the lion’s share of votes on Thursday, while Democrats may provide more than half of the votes for the omnibus on Friday. But House Minority Leader Nancy Pelosi (D-Calif.) said Thursday that she is not confident there are enough Democratic votes to push the omnibus over the finish line at this point, although though she herself will support the bill.

Just 79 House Republicans voted for the budget deal brokered by former Speaker John Boehner (R-Ohio) in October that provides the outline for the spending package. But more Republicans may vote for the omnibus on Friday due to a “sweetener” provision attached to the bill that lifts the crude oil export ban, a top priority for the GOP.

The White House has signaled support for both measures, and the Senate is expected to approve them before the end of the week —likely after combining them into one package.

Of the two year-end bills, the tax measure is more controversial with Democrats, with many fearing it will increase pressure to reduce spending by raising the deficit. The measure makes permanent several business tax breaks such as the research and development tax credit and enhanced small business expensing under section 179 of the tax code.

Still, while Democratic leaders opposed the tax package, they did not whip their members against it and Minority Whip Steny Hoyer (D-Md.) acknowledged that it included tax measures supported by members of his conference.

Tax breaks that would be cemented include the expansions of the earned income tax credit, the child tax credit and the American opportunity tax credit, which were all created under President Obama's stimulus law.

The measures also makes some GOP-backed reforms to the Internal Revenue Service in the wake of the controversy surrounding the IRS’s targeting of political groups, and includes a two-year freeze of ObamaCare's medical-device tax.

A separate ObamaCare changing freezing the "Cadillac" tax on high-cost insurance plans is included in the omnibus package.

Overall, House Republicans cast the measure as a step toward tax reform that would provide certainty for people and businesses.

“How can families and local businesses count on tax relief each year as long as Congress can’t decide what’s permanent and what’s not? That confusion ends with this bill,” said House Ways and Means Committee Chairman Kevin BradyKevin BradyUnemployment drops to 4.6 percent Treasury's agenda for Steven Mnuchin is already set Overnight Healthcare: GOP in talks about helping insurers after ObamaCare repeal MORE (R-Texas).

House Democrats argued that by raising the deficit, the bill would make it difficult for the federal government to make necessary investments in defense and domestic spending.

They noted that the tax cuts are not offset, and they criticized Republicans for not indexing for inflation the child tax credit, which helps working families.

“For those who propose to have the increase in the deficit continue to drive down defense and domestic spending, this bill will almost certainly accomplish this,” said Rep. Sandy Levin (D-Mich.), the top Democrat on the House Ways and Means Committee.

In the Senate, support for the tax measure is more bipartisan than it is in the House. Senate Finance Committee ranking member Ron Wyden (D-Ore.) joined with the Republican chairmen of the House and Senate tax-writing committees in announcing the deal.

The Senate’s third-ranking Democrat, Charles Schumer (N.Y.), released a statement Wednesday praising the fact that the bill would cement a tax benefit for mass transit commuters in a win for his state.

Still, not all Senate Democrats support the tax extenders package. Three governors-turned-senators — Mark Warner (D-Va.), Joe Manchin (D-W.Va.), and Angus King (I-Maine) — spoke on the Senate floor Thursday and expressed concerns that the bill would add to the national debt.

The Joint Committee on Taxation (JCT) estimated that the tax bill will cost $622 billion over 10 years. Tax provisions in the omnibus will cost an additional $58 billion over 10 years, JCT said.

- This report was updated at 5:55 p.m.