Old habits die hard; for the House Ways and Means Committee, the pesky habit is trying to extend expired tax breaks without paying for them.
Last week the committee approved permanently adding several expired breaks to the tax code, which would boost the deficit by $420 billion over the next 10 years.
There is little chance of Senate passage. But if all the bills passed this year by Ways and Means to permanently extend breaks were to became law, over the next decade they would add $1 trillion to the deficit.
Most of last week’s provisions would benefit certain businesses. The largest break, bonus depreciation, which allows businesses to write off some purchases immediately, would cost $280 billion over 10 years.
Extending tax breaks without paying for them is fiscally irresponsible and ignores pay-as-you-go rules, which require tax cuts to be offset with spending reductions or revenue increases.
Ways and Means is also moving further away from the Congressional Budget Resolution’s stated goal of balancing the budget over the next decade. That’s because the revenue projected to come in from the expiration of these tax breaks is counted in the resolution’s totals.
Instead of attempting to make piecemeal changes to the tax code that add to the deficit, lawmakers should be focusing on a comprehensive rewrite of the code to make it simpler, more efficient and more growth-oriented.
External links:
Ways and Means Keeps Cutting Taxes, Adding to Debt (CRFB)
Waiving PAYGO, House OKs More Deficit-Raising Tax Legislation (Concord)
House Tax Bills Would Raise Deficits (Concord)
