House Increases Deficit by $90 Billion
By a vote of 234 to 197, the House of Representatives approved $56.1 billion in new tax breaks on Thursday, December 8. H.R. 4297 is the House version of the tax reconciliation bill. The centerpiece of the bill is a $23 billion tax break for those who claim capital gains and dividends – which overwhelmingly benefit the wealthy. All but three Republicans members voted for the tax cut; all but nine Democrats opposed the tax cut. The Senate approved its own tax reconciliation bill (S. 2020) on November 17.
The tax reconciliation vote came on the heels of three earlier tax cuts approved in the House the day before. Just this week alone the House has passed tax breaks that cost $90 billion over the next five years. None of those breaks are paid for or “offset.” In effect, the House voted to increase the deficit by $90 billion.
The centerpiece of the House tax reconciliation bill was a provision that extends for two years capital gains and dividend tax cuts. The federal government would lose $21 billion in revenue over five years and even more in the long run from the provision. Households with more than $1 million in income would get 45 percent of the benefits from the capital gains and dividend breaks.
The Senate tax reconciliation bill does not include the capital gains and dividend provisions because Senator Olympia Snowe (R-ME) threatened to oppose the bill when it was considered at the committee level if the capital gains and dividends piece was included. Instead, the Senate tax bill includes a provision that exempts certain households from paying the alternative minimum tax (AMT). The AMT provisions primarily benefit upper income households with income between $100,000 to $500,000. Less than one percent of the benefits of AMT would go to households with income of more than $500,000. Those same households, in contrast, would get 55 percent of the benefits of the capital gains and dividend provisions.
Advocates for low-income families are outraged that members of Congress are willing to increase the deficit by approving new tax breaks, direct most of the tax breaks at the highest end of the income scale, and simultaneously vote to slash nutrition assistance for hungry children, health care for sick mothers and babies, child support for single parent families, and foster care help for grandparents who are taking care of their abused and neglected grandchildren.
Republican leaders have admitted it is unlikely Congress will be able to agree on a final tax reconciliation bill before the end of the year.
For More Information
Citizens for Tax Justice: Senate and House Tax Bills Differ Markedly
CBPP: More House Tax Cuts, Total to Exceed $90 Billion
CBPP: Senate and House Reconciliation Tax-Cut Packages Flawed
Categories: Tax Policy