The GOP House budget proposal released Tuesday implies that lawmakers intend to allow the controversial package of business tax cuts known as tax extenders to expire for good. If true, this would be an important step toward a fairer tax system. Unfortunately, they probably don’t mean it.
As we have noted before, the extenders are mostly a motley array of ineffective giveaways to businesses. There’s the research credit that gives businesses tax breaks for such dubious activities as developing new soft drink flavors or exploring how to replace workers with machinery. And then there’s bonus depreciation, which allows businesses to write off the cost of capital investments at a much faster pace than which materials actually depreciate. There’s also the infamous “active finance” loophole, which is likely a main driver in allowing General Electric to pay next to nothing in federal income tax most years.
The House budget blueprint says nothing at all about the fate of these and other tax “extenders,” each of which expired at the end of 2014. On its face, this suggests that Republican leaders are ready to say a permanent adieu to these ill-advised tax breaks, which have been the subject of a year-end drama almost every year recently. After all, the blueprint’s authors are pretty vocal about the few high-end tax cuts they explicitly propose in the document, so one would expect they’d be poised to brag about the extenders as well. But in light of Republican leaders’ recent history in dealing with budget blueprints—and with the extenders—a very different interpretation seems more plausible. In all likelihood, the House leadership fully intends to bring the extenders back—it just would prefer not to have to explain, at this time, how Congress will find the revenue needed to pay for them.
We’ve been here before: a year ago, the House budget plan formulated by then-Budget Chair Paul Ryan was just as conspicuously silent on reviving the extenders. But the House leadership subsequently revealed their true stripes, approving several bills over the course of 2014 that would not only have brought these misbegotten tax breaks back, but also would have made some of them permanent.
While this strategy is intellectually dishonest, this approach to budgeting makes perfect sense for those seeking only to masquerade as fiscal conservatives. During the budget season, everyone wants to be able to claim they’ve proposed a “balanced budget.” And the more tax cuts you propose, the harder it is to say with a straight face that your budget proposal is fiscally responsible. But months from now, when the goal has shifted from burnishing their “fiscal conservative” credentials to pushing through tax cuts for grateful corporations, the budget-busting impact of the extenders will be less of an issue.
This shell game has real consequences for the federal budget, and for middle-income working families. Every time Congress passes up the chance to root out unwarranted tax loopholes for corporations and the wealthy, that’s increasing the odds that the next budget fix will fall on low- and middle-income taxpayers.
Budgets are moral documents, laying out a vision of the priorities of a government and of its citizens. From this perspective, the House budget blueprint’s hypocritical silence on the fate of the tax extenders borders on the sociopathic.