CHN: House Passes Billions in Business Tax Breaks; Leaves out Low-Income Tax Credits

In mid-February, the full House passed (272-142 and 279-137) a series of tax breaks for businesses at a cost of more than $93 billion over 10 years. The bills, H.R. 636 and H.R. 644, would make these breaks permanent parts of the tax code. Also in February, the House Ways and Means Committee, headed by Chairman Paul Ryan (R-WI), passed two additional permanent tax breaks (H.R. 880 and H.R. 622) costing $224 billion over 10 years. None of these tax breaks would be paid for by closing other tax loopholes, raising revenue in some other way, or cutting spending, meaning the cost of all of these bills would add over $317 billion to our nation’s deficit.
Advocates cried foul, noting that not only did the House vote for business tax breaks while investments in human needs programs continue to shrink, they failed to make permanent improvements made in 2009 to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). If the improvements are allowed to expire in 2017, 16 million children and adults will fall into poverty or become more deeply poor.

While some of the breaks passed by the House have merit for the anti-poverty community, like one that provides incentives for businesses to donate their food inventory to charities, the charitable incentives make up only 5 percent of the total tax breaks passed by the Ways and Means Committee in February. Advocates believe that passing these breaks that do good opens the door for – but doesn’t justify – hundreds of billions of dollars of breaks that add to the deficit and leave low-income folks behind, and that charitable breaks could easily be paid for by reducing tax breaks that do nothing to promote shared prosperity.

The Center on Budget and Policy Priorities also noted that Chairman Ryan has said he supports expanding the EITC for workers without dependent children and paying for it by making changes supposed to reduce errors and overpayment within the EITC. In fact, these changes would make it more difficult for eligible people to claim the EITC. In addition, Rep. Ryan voted for permanent business tax breaks with a much higher error rate without paying for them.

Where these tax breaks will go from here is unclear. For now, the Senate has refrained from taking up any of these breaks in the hopes of moving larger tax reform legislation. For its part, the White House said that it would veto the bills the House passed, both because they not paid for and because they leave out the EITC and CTC.

tax policy