House Passes $622 Billion Tax Measure

Package makes permanent breaks for individuals and businesses.

The House passed a $622 billion package of tax cuts on Thursday, breaking out of a routine of temporary policy-making and allowing Republicans to focus on a bigger revamp of the tax code in 2016 and beyond.

Thursday’s bipartisan legislation would make permanent an array of breaks for individuals and businesses that had lapsed already or were scheduled to expire. The bill will provide certainty for companies and families that previously had to wait each year or two for Congress to retroactively reinstate their breaks.

“This is a great day for small businesses,” said Dan Danner, president of the National Federation of Independent Business.

The legislation advanced on a 318-109 vote, with nearly all Republicans in favor and Democrats divided. The tax package is expected to be combined with a second measure—which has $1.15 trillion in spending and an additional $58 billion in tax cuts—on Friday and then sent to the Senate. President Barack Obama supports the tax-and-spending agreement.

By locking the breaks in now, Republicans also lower the government’s total revenue forecast for the next decade. That means they will need to eliminate fewer tax breaks to get an overhaul bill that is certified as revenue-neutral by congressional scorekeepers. In other words, cutting taxes now will make the larger tax bill coming later look like a smaller tax cut or no tax cut at all.

Meanwhile, Republicans cheered Thursday’s legislation.

“This will deliver predictability, clarity and certainty for individual taxpayers as well as businesses,” said Rep. Kevin Brady (R. Texas), chairman of the House Ways and Means Committee.

Some House Democrats criticized the measure as tilted too heavily toward big corporations and called it unfair because Republicans insist on finding offsetting cuts for new spending but not for tax cuts. They warned that the measure would starve the government of money for future priorities.

“There is a bigger picture here and the bigger picture is our responsibility to the future, and the chickens will come home to roost on this,” said Rep. Nancy Pelosi (D., Calif.), the House minority leader. “We will have to pay.”

The bill would make permanent:

– the research and development tax credit,

– faster capital-equipment write-offs for small businesses, and

– a rule that lets multinational banks defer U.S. taxes on their foreign income.

All of those breaks had expired at the end of 2014.

The legislation also would continue indefinitely expanded tax credits for low-income families, children and college students that were created in the 2009 stimulus law.

Those breaks had been scheduled to lapse at the end of 2017, after the end of Mr. Obama’s term, and the White House said 24 million families would benefit from the extension.

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