Federal Budget

US House Republicans unveil broad package of tax cuts

US House Republicans unveil broad package of tax cuts

Business

The law comes after Biden introduced an increase in debt ceiling to avert default threats

 WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives unveiled a series of new tax breaks aimed at businesses and families while proposing to reverse some of President Joe Biden's legislative victories, including credits to spur the sale of clean-burning electric vehicles.

Three related bills were introduced with the goal of moving the legislation through the House Ways and Means Committee next week. That is when the Joint Committee on Taxation also is expected to release its analysis of the package.

White House spokesperson Karine Jean-Pierre termed the proposals a "tax scam" and alleged that "(Republican) priority isn't reducing the deficit or out-competing the world, their priority is giving handouts to rich special interests and corporations at the expense of everyone else."

Democrats already were focusing on whether the tax legislation could add to the ballooning federal debt.

"These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness," Ways and Means Chairman Jason Smith said in a statement.

The committee said there are hundreds of billions of dollars worth of provisions included. Some are expansions of tax breaks while others eliminate or roll back existing ones, such as Biden's electric vehicle credit.

Representative Richard Neal, the panel's senior Democrat, said Republicans were "laying the groundwork for even bigger cuts in 2025" when provisions of the 2017 tax law expire. The measure introduced on Friday, Neal said, would usher in "retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families, and sneaking in favours for Big Oil."

Republicans, who control the House, introduced the proposals days after Biden, a Democrat, signed into law legislation Republicans sought to begin addressing the rapidly-growing debt with about $1.3 trillion in spending cuts.

The law was coupled with an urgently needed increase in U.S. borrowing authority by suspending the debt limit through Jan. 1, 2025.

Under the proposed legislation, married couples filing jointly would receive a $4,000 "deduction bonus" for two years that the committee said would potentially help up to 107 million families who take the standard deduction.

The legislation also would significantly increase the way businesses could claim depreciation deductions, raising the threshold to a permanent $2.5 million from the current $1 million that was contained in the Republicans' broad 2017 tax cut package.

Other provisions include an expansion of tax benefits for small start-up enterprises to "S Corporations," while eliminating some "red tape" that small businesses experience related to contract workers.

Democrats on the Ways and Means panel are expected to offer amendments to the bill, including a permanent expansion of an expired portion of the Child Tax Credit that lifted nearly 4 million children out of poverty in just one year during the coronavirus pandemic. Republicans have opposed the measure.

Any bill that emerges from the House would likely face stiff opposition in the Democratic-controlled Senate.