Congress’s agreement on taxes announced late Tuesday night would set the Treasury back $680 billion over 10 years, according to an analysis released by Congress’s in-house tax agency.
The Joint Committee on Taxation released an analysis Wednesday showing that the tax provisions included in the “extenders” package hammered out by congressional negotiators would cost $622 billion, while tax provisions in the related government spending bill would cost an additional $58 billion.
Those revenue losses, while slightly smaller than some analysts had expected, would not be offset by spending cuts or tax increases elsewhere in the budget, meaning they would be added to the deficit.
Much of the losses, however, come from taking certain temporary tax provisions that are routinely extended year after year and making them permanent. Many members of Congress have argued that since the tax breaks are re-upped so often that they’re effectively permanent, officially making them permanent shouldn’t be counted as a new addition to the deficit.
Some of the most costly provisions, however, are ones that undo parts of Obamacare that were meant to raise revenues for the expansion of healthcare coverage.
For instance, the spending bill would delay the “Cadillac tax” on high-cost healthcare plans for two years, at a cost of nearly $20 billion over 10 years. It also would impose a two-year moratorium on the medical device tax at a cost of $3.9 billion. A one-year pause in fees on health insurance providers would cost $12 billion.
The single most costly provision would be a permanent extension of a credit for business research and experimentation, one of the most frequently extended breaks, totaling $113 billion. A measure allowing small businesses to write off certain big-ticket investments would add $77 billion to the total, and a break for certain foreign earnings of multinationals would add another $78 billion.
Expansions of refundable low-income tax credits first included in President Obama’s 2009 stimulus bill would be made permanent in the bill. A boost in the size of the Child Tax Credit would cost $88 billion, while extending the Earned Income Tax Credit to cover more children and alleviate a marriage penalty would add another $30 billion.
