WASHINGTON (AP) — The House voted Friday to make permanent a tax credit that rewards businesses for investing in research and development, pushing Congress toward an election-year showdown over a series of expired tax breaks that are popular back home but add billions to the budget deficit.
The research tax credit expired at the beginning of the year, along with more than 50 other temporary tax breaks that Congress routinely extends.
House Republicans said Friday's vote was the beginning of a broader effort to add more certainty to the tax code. In the coming weeks, they hope to vote on bills to make more temporary tax breaks permanent, though they have yet to decide on which ones.
"Beyond having the dubious distinction of the highest corporate rate in the world, the United States is also the only country that allows important pieces of its tax code, like the research and development tax credit, to expire on a regular basis," said Rep. Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee. "Businesses cannot grow and invest when the tax code is riddled with instability and uncertainty."
Camp noted that the research credit has been around since 1981 and has been renewed many times with broad bipartisan support. Friday's bill passed by a vote of 274 to 131, with 62 Democrats joining nearly every Republican in support.
Some House Democrats called Friday's vote a corporate giveaway that would add $156 billion to the budget deficit over the next decade. They goaded Republicans for calling themselves fiscal conservatives while adding so much to the nation's long-term debt.
"It's not only fiscally irresponsible, it's also hypocritical," said Rep. Sander Levin of Michigan, the senior Democrat on the Ways and Means Committee.
President Barack Obama supports making the research and development tax credit permanent. But the White House threatened to veto the House bill because it isn't offset by other tax increases. The veto message noted that if all the 50-plus temporary tax breaks were made permanent, it would "add $500 billion or more" to the deficit.
"The administration wants to work with Congress to make progress on measures that strengthen the economy and help middle-class families, including pro-growth business tax reform," the White House said in a statement. "However, making traditional tax extenders permanent without offsets represents the wrong approach."
Almost every year, Congress allows a package of more than 50 temporary tax breaks for businesses and individuals to expire, only to renew most of them in time for taxpayers to claim them on their returns.