WASHINGTON – The House on Thursday introduced a $57 billion measure to extend and expand tax breaks, putting it on a collision course with the Senate.
The upper chamber moved its own version of the tax bill earlier this week.
At stake in the waning hours of this congressional session is tax policy affecting billions of dollars in business investment and millions of taxpayers, including more than 20 million exposed to the alternative minimum tax.
The House, steered by fiscally conservative Democrats, says the tax relief should be paired as much as possible with new tax revenues so as not to worsen the federal deficit. The tax breaks are important, said House Majority Leader Steny Hoyer, D-Md., “but it is simply wrong to pay for it by once more whipping out the national credit card.”
Senate Republicans object to almost anything smacking of a tax increase.
The House bill, which appears headed for a vote today, has about $15 billion in tax incentives for investments in renewable energy resources such as wind, solar, geothermal and water power. It has tax breaks for carbon sequestration projects and has a new credit for purchasers of plug-in electric drive vehicles.
The legislation also renews, mostly for two years and at a cost of $42 billion, dozens of targeted tax breaks that expired at the end of last year or will expire at the end of this year. The biggest is the $18 billion R&D credit, but there are also extensions of credits for teachers with out-of pocket expenses, people paying college tuition and people living in states with state and local general sales taxes. The refundable child tax credit is expanded, at a cost of $3 billion.
The House bill is fully paid for, by limiting tax breaks given to the oil and gas industry and closing loopholes hedge fund managers and corporations use to lower taxes on overseas income.
That puts it at odds with the Senate, which on Tuesday passed a three-part comprehensive tax package including AMT and disaster relief. The Senate pays for about $17 billion in renewable energy incentives but offsets only about $25 billion out of $68 billion in tax extensions.
The House bill also prompted a White House veto threat, which said in a statement it was disappointed the House had “insisted on raising taxes on certain classes of Americans in order to extend current law.”
The House and Senate are more in synch on another part of the tax package: On Wednesday the House separately passed a one-year fix of the alternative minimum tax to prevent the number of people affected by the “millionaires’ tax” from jumping from about 4 million to 26 million. It overwhelmingly passed a national disaster relief plan.