With a 240-179 vote, the House of Representatives passed legislation last week that would repeal the estate tax without offsetting the lost revenue, adding $269 billion to the deficit over the next decade.
The House also approved legislation that — also without offsets — would make permanent a deduction for state and local sales taxes. It passed 272-152 and would add $42 billion to the deficit over the next decade.
With these measures, lawmakers are unfortunately backsliding again on pay-as-you-go (PAYGO) rules. Both bills waived these rules, which require tax cuts and increased mandatory spending to be offset through spending cuts or revenue increases.
Legislation identical to the House bill repealing the estate tax was recently introduced in the Senate by Finance Committee Member John Thune (R-S.D.). Two other committee members, Sen. Dean Heller (R-Nev.) and Sen. Maria Cantwell (D-Wash.), have introduced legislation that would permanently extend the state and local sales tax deduction.
The House bills were the latest in a series of tax cuts that the House has passed without paying for them.
In addition, Congress recently replaced Medicare’s Sustainable Growth Rate (SGR) formula, which set payments to providers. Because lawmakers waived PAYGO rules there as well, this change — which President Obama signed last Thursday — will add an estimated $141 billion to the deficit over the next decade.
By increasing spending and lowering revenue without offsets elsewhere in the budget, the House is moving further away from its stated goal of balancing the budget in nine years.
External links:
Estate Tax Repeal Cost Estimate (Joint Committee on Taxation)
State and Local Sales Tax Deduction Cost Estimate (Joint Committee on Taxation)
Charts on the Tax System (CRFB)
House Tax Bills Would Raise Deficits (Concord)
Senate Follows House on Changes in Medicare Payments (Concord)
Obama Signs Overhaul of How Medicare Pays Doctors (AP)
Will Tax Reform Mean the End of These 10 Tax Breaks? (Fiscal Times)
