House approves $42 billion tax break package

WASHINGTON — The U.S. House approved Wednesday a short-term fix for dozens of expired tax breaks that would cost nearly $42 billion over the next decade. The Senate and White House have signaled they will not oppose the plan, which is on track for approval before Congress adjourns.

The bill passed with overwhelming support, 378-46.

The one-year, retroactive fix will allow millions of businesses and individuals to claim the breaks on their 2014 tax returns, but the fate of the package next year, known as tax extenders, is uncertain after President Obama cut short bipartisan negotiations for a long-term deal with a veto threat.

"The president killed it. Period," said House Speaker John Boehner, R-Ohio.

The White House announced their opposition last week to a plan under negotiations with Senate Democratic leaders that would have cost $450 billion over 10 years and that would have made permanent certain business tax breaks. The administration balked before a deal had been formally announced because they said it did too much for big corporations and not enough for the middle class.

Prep for the polls: See who is running for president and compare where they stand on key issues in our Voter Guide

Senate Majority Leader Harry Reid, D-Nev., who was involved in the negotiations, told reporters that the veto threat "ended the discussions."

The short-term fix mainly benefits businesses, but it also includes a mix of tax breaks benefiting a number of special interests including teachers, commuters and Puerto Rican rum producers. The package affects about one in six taxpayers, according to The Tax Institute, H&R Block's independent research.

Congress has routinely approved short-term extensions of the tax package since the 1980s, but they expired in January and consensus for a long-term tax deal remains elusive.

Among the most significant tax breaks breaks for businesses are a research and development tax credit, an exemption that allows financial companies to shield foreign profits from being taxed by the U.S., and provisions that allow businesses to write off capital investments more quickly.

Tax breaks for individuals includes a provision that allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns. Another protects struggling homeowners who get their mortgages reduced from paying income taxes on the forgiven debt amount.

Some Democrats are unhappy the package leaves out two provisions: a tax credit that helps some laid-off workers pay for health insurance and a tax credit for buying electric motorcycles.

Outside budget groups criticized Congress for the short-term fix and called on lawmakers to pursue a broad overhaul of the federal tax code in the next Congress. Republicans will control both chambers come January.

"Congress should be pursuing comprehensive tax reform that would update the tax code, enhance competitiveness, grow the economy and reduce the deficit," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "This exercise of ad-hoc legislating has become an embarrassing and damaging standard practice."

Contributing: Associated Press