A new report from Citizens for Tax Justice examines the $54 billion tax cut bill that the President is threatening to veto because it includes revenue-raising provisions to offset the costs. The President's stance threatens a needed improvement in the Child Tax Credit for poor families with children, as well as several other tax changes sought by lawmakers.
The bill, (H.R. 6049) was approved by the House of Representatives on Wednesday and includes extensions of several temporary tax cuts targeting various interests (commonly referred to as "extenders") as well as renewable energy tax incentives and a few new tax cuts. Similar bills passed during the Bush years resulted in increases in the federal budget deficit because they did not include revenue-raising provisions.
The Office of Management and Budget (OMB) issued a statement asserting that it would advise the President to veto the extenders bill if approved by both chambers in its current form. The main reason is that the legislation includes revenue-raising provisions to prevent it from increasing the federal budget deficit.
Equally alarming is the fact that the White House actually supports all of the most poorly targeted and unjustified tax breaks in the extenders bill, even while opposing any effort to pay for them.
But at least one of the tax cuts in the bill is a good idea. It would expand eligibility for the Child Tax Credit for one year, at a cost of $3.1 billion.
The report concludes that the President should champion provisions like this, which actually do make the tax code more progressive, as well as the responsible and fair revenue offsets that would raise enough money to pay for this and other tax breaks in the bill.
The report: http://www.ctj.org/pdf/extenders20080523.pdf