In Washington, a new holiday tradition is forming: Congress passing large tax breaks without paying for them.
At the end of last year, lawmakers retroactively extended 50 temporary provisions — known as tax extenders — for 2014. Now reports indicate the possibility of a deal that could indefinitely extend some of those now-expired provisions while also extending refundable tax credits and delaying some taxes from the Affordable Care Act (ACA).
Including interest costs, such a plan could add $835 billion to the national debt over the next decade, according to a recent estimate by the Committee for a Responsible Federal Budget. Negotiations, however, are continuing.
The reported provisions mostly affect businesses, including one that allows favorable expensing of certain equipment purchases. Lawmakers are also discussing two-year postponements of the ACA’s medical device tax and the “Cadillac tax” on high-cost insurance plans.
Passing tax cuts or extending tax breaks without offsets that would keep the debt from growing larger is fiscally irresponsible and a poor substitute for comprehensive tax reform. This is one year-end tradition we can do without.
External links:
Congress Prepares Huge Tax Break Giveaways for 2015 (Fiscal Times)
Emerging Tax Deal Could Add $2.3 Trillion to the Debt by 2035 (CRFB)
