Roughly a week after Congress approved a measure to slash federal spending and suspend the debt ceiling, House Republicans on Friday unveiled a sprawling set of proposals that aim to cut taxes for businesses and families.
The new legislative package threatens to add billions of dollars to the nation’s growing debt at a time when Republicans have clamored in Washington for austerity – and recently drove the government to the brink of default in pursuit of it.
Republicans laid out their agenda in a trio of bills introduced by Rep. Jason T. Smith (R-Mo.), the leader of the tax-focused House Ways and Means Committee, whose panel is set to consider the measures as soon as next week. Democrats already have panned the GOP blueprint, foreshadowing its likely death in the Senate even if it advances out of the narrowly divided House.
The first measure temporarily would revive a set of tax breaks chiefly targeting companies’ research spending, interest expenses and equipment purchases. All three policies help lower large corporations’ tax bills, but they lapsed last year as part of a larger, planned wind-down of President Donald Trump’s 2017 tax overhaul, a process that accelerates in 2025.
As part of that bill, Republicans also proposed to rethink key climate programs that Democrats secured last year in the Inflation Reduction Act in a bid to fight climate change. The proposal would introduce new limits on tax credits meant to help Americans purchase electric vehicles, while prohibiting purchasers from applying the federal aid toward used vehicles. Republicans also would revoke tax credits to boost clean energy production and clean electricity investment, and they would terminate the new tax imposed on toxic chemical dumping sites.
In a second measure, Republicans would allow American families that earn less than $400,000 annually to claim a larger standard deduction for the next two years. Married couples who do not itemize would see their deductions rise by $4,000, while single filers would benefit from an extra $2,000, further augmenting the increases that taxpayers initially received under the 2017 overhaul.
A third bill – largely targeting small businesses – would repeal a requirement that taxpayers report to the government any transactions above $600 occurring on services like Venmo. While the Internal Revenue Service last year delayed implementation of the rule, GOP lawmakers supported restoring it to its original $20,000 threshold.
“These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness,” Smith said in a statement.
In reviewing the legislation, the nonpartisan Joint Committee on Taxation estimated that the three GOP bills together would add about $21 billion to the deficit over the next 10 years. But some budget experts said that figure tells only part of the story, since Republicans relied on timing and accounting maneuvers to create the impression of a low price tag.
For one thing, the three bills extend Trump-era tax breaks targeting businesses only through 2025, even though Republicans have said they hope to make them permanent. During that period, the GOP plans actually add about $300 billion to the federal deficit, much of which they offset through the repeal of climate-focused tax credits that aren’t scheduled to take effect until 2027.
To that end, the Tax Policy Center concluded in its own recent analysis that these business provisions alone could cost the government about $500 billion over the coming decade if they are extended indefinitely, as Republicans seek.
Anticipating criticism, Republicans in recent weeks have pointed out that such proposals create jobs and economic activity, lessening the deficit impact. But the early math still offered a stark contrast with the party’s pronouncements about the nation’s worsening fiscal health – and it drew early, sharp rebukes from Democrats who blasted the GOP bills as hypocritical.
“It’s Republican clockwork. Not even a week after their manufactured default crisis and it is back to tax cuts for the wealthy and well-connected,” charged Rep. Richard E. Neal (D-Mass.), the top Democrat on the Ways and Means Committee. The congressman also faulted the GOP for trying to repeal clean energy-focused policies at a moment when “Americans are sheltering inside to avoid the fallout of climate-spurred wildfires.”
Biden, for his part, proposed during weeks of private talks with House Speaker Kevin McCarthy (R-Calif.) that the country could reduce the nation’s debt by raising more money – imposing long-sought tax hikes targeting wealthy American families and corporations. But Republicans rejected those ideas outright, resulting in a deal that achieves only limited improvement in the nation’s finances through some cuts to federal agencies’ budgets. That included clawing back billions of dollars that were supposed to help the IRS pursue unpaid federal taxes.