Dozens of Democrats ignored President Barack Obama’s veto threat and voted for legislation that would permanently extend a tax rule that supporters of the bill say would help companies create jobs.
The House approved the tax provision Friday morning, in a 258-160 vote that saw 34 Democrats vote with Republicans. The bill would let companies immediately deduct half of all equipment purchases from their tax bill, a practice known as “bonus depreciation.”
The vote took place just a day after the White House said the bill would make permanent a tax break for companies that was only supposed to be temporary.
“This provision was enacted in 2009 to provide short-term stimulus to the economy, and it was never intended to be a permanent corporate giveaway,” the White House said.
But both Republican and Democratic supporters of the bill supported the measure as a way to help free up capital for companies that might go toward hiring people. Rep. Pat Tiberi (R-Ohio) said when he introduced the bill in May that the tax change should be made permanent in order to boost job growth.
“I’ve heard time and again from small business owners in Ohio that extending bonus depreciation is the single biggest factor in allowing their businesses to grow,” Tiberi said. “Allowing companies to use these tools for capital reinvestment is a common-sense way to encourage job creation.”
Heritage Action also supported the bill, and said it would get the U.S. tax code one step closer to being neutral about how to treat equipment purchases. Heritage Action said being “neutral” means the tax code doesn’t favor one type of business expense over another, which would let the market work.
Obama also argued that the bill would increase the budget deficit. Earlier this year, the Congressional Budget Office said the bill would reduce federal tax revenues by $287 billion over the next decade.
Republicans have said tax cuts have traditionally not been paid for with offsetting spending cuts.