Just days after Washington’s tug of war to raise the debt ceiling, House Republicans are calling for billions in new tax cuts.
GOP lawmakers unveiled a plan on Friday that would provide a range of benefits to big business, small business as well as millions of average Americans.
Nonpartisan congressional forecasters say tax cuts would amount to some $240 billion over the next decade, most of which Republicans propose to cover by reversing $216 billion in energy cuts green — which is unlikely to fly with Democrats.
The package — which would strengthen the standard deduction and expand business research write-offs, among other provisions — is being rolled out toward a year-end tax deal, which many Democrats also want. They are already demanding an expansion of the Child Tax Credit as the price of any deal, which could inflate the cost.
“These policies will bring relief to working families, strengthen small businesses, create jobs and protect American innovation and competitiveness,” said Ways and Means Committee Chairman Jason Smith (R-Mo.).
The panel’s ranking Democrat, Rep. Richard Neal (D-Mass.), Retorted, “Not even a week into their default crisis and it’s back to tax cuts for the rich and well off.” connected.”
Lawmakers had hoped to hammer out a similar exchange of tax benefits for businesses during last year’s lame session, though it met with surprisingly little success.
But many are eager to try again and see the end of this year as their last chance to do something big on the tax front in this session of Congress.
Part of the Republican plan would roll back restrictions on several popular tax breaks for businesses that recently came online. Lawmakers are facing increasing pressure from the business community to roll back stricter rules on the write-off of research and development expenses, in particular, which has driven up effective tax rates that many companies pay.
In addition to temporarily restoring R&D hiatuses, their plan would also roll back stricter rules on capital and interest expense deductions through 2025.
Other parts of the plan would expand the so-called Opportunity Zone program, with an initiative aimed specifically at benefiting rural areas – something that is particularly important to Smith. They would also restore reporting requirements designed to assess the effects of the program that Republicans were forced to abandon when they originally created the initiative.
The plan would raise the threshold at which small businesses must report payments to contractors to $5,000 from $600, noting that this has not been raised in more than 50 years despite inflation. And the bill would allow small businesses to immediately deduct $2.5 million in capital expenditures, up from $1 million previously.
There are also tax cuts for individuals, including a plan to temporarily extend the standard deduction to $2,000 for individuals and $4,000 for couples. Republicans would also rename the standard deduction the “guaranteed deduction.”
They would kill an IRS crackdown on taxes paid by gig workers that Democrats signed into law in 2021, but that has been delayed. At the same time, the bill targets some of the green energy tax credits that Democrats approved last summer, including benefits for the purchase of electric vehicles, which would offset at least some the cost of the plan.
The Ways and Means Committee plans to consider the legislation next week.
Democrats have strongly criticized Republicans’ attempt to cut corporate taxes, but, ironically, Democrats might be better off accepting bigger benefits for corporations.
This is because, according to the logic of the Capitol Hill accords, if one party receives a certain amount of money to spend, the other also receives a similarly sized allocation.
And expanding the Child Credit is expensive because it’s demanded by so many, so giving more to American businesses would mean Democrats would have a bigger budget to expand the credit. They probably wouldn’t have enough to revive the lapsed pandemic-era expansion that was sending monthly checks to millions of Americans, so they’d have to settle for something more progressive.
There are a few surprises in the package, including a provision that would impose a 60% excise tax on people from certain countries like China who buy US farmland. The bill would also allow S corporations to take advantage of a break for so-called qualified small business shares.
There are also some unexpected omissions, with lawmakers omitting a bipartisan proposal to cut taxes for car dealerships who complain that a combination of the pandemic and the murky accounting rules they use to calculate their taxes has temporarily spiked their bills. taxes to the sky.