The House voted Wednesday to slap higher taxes on Wall Street investment managers to help pay to extend $31 billion in tax breaks for a wide range of Americans, including popular deductions for local and state sales and property taxes.
The 45 tax deductions and credits for businesses and individuals are scheduled to expire at year's end. The House voted 241-181 to extend them for a year. The bill now goes to the Senate, which has rejected the tax increase on investment managers in the past.
The tax breaks include a sales tax deduction that mainly helps people in the nine states without local income taxes, a property tax deduction for people who don't itemize and lucrative credits that help businesses finance research and development.
The tax breaks are supported by Democrats and Republicans alike and are routinely extended each year, but there are big disagreements over the tax increases that would pay for them. The dispute, combined with the Senate's prolonged debate on health care, makes it unclear whether the tax package will be enacted this year.
Lawmakers could retroactively pass the package early next year, but that would make tax planning difficult.
The House bill would raise $24.6 billion over the next decade from the tax increase on investment fund managers. It would affect hedge fund and private equity managers, as well as the more than 1.2 million real estate investment partnerships, according to the Real Estate Roundtable.
The House bill would raise an additional $7.7 billion from a crackdown on international tax cheats, an issue the Internal Revenue Service and the Obama administration have embraced.