A bipartisan compromise to expand the child tax credit and restore some corporate tax breaks looks like it may wither under opposition from Senate Republican leadership, dooming the measure even though the House passed it with a huge majority this year.
The Senate’s top Republican tax writer, Mike Crapo (Idaho), opposes the bill, as do other top party officials. Most Democrats back it, and supporters say it’s close to having enough GOP votes to overcome a filibuster but could still be short. With tax season over and elections approaching rapidly, the Senate may not take the bill up at all if lawmakers don’t act soon.
But even some Republicans who like the compromise plan say they might rather deal with the issue next year. The GOP hopes to control the Senate – at least – after November’s elections, and sweeping tax policy changes will already be on Congress’s agenda no matter who controls the chambers because much of the Trump-era Tax Cuts and Jobs Act expires in 2025.
Lawmakers will have to decide whether to extend any of the trillions of dollars in tax cuts that are set to come off the books, and the child tax credit could roll into that broader debate.
“I think from a political standpoint, a lot of Republicans, me included, feel like we’ll have more leverage a year from now than we have today,” Sen. Kevin Cramer (R-N.D.) said Tuesday. “… We want to help working families. We want to help the employers who support those working families, who hire those working families, and we have a year to do it. And we don’t need to rush into it.”
Other supporters, especially Senate Finance Chair Ron Wyden (D-Ore.) and some rank-and-file Republicans, are pressing Senate Majority Leader Charles E. Schumer (D-N.Y.) to bring the $79 billion legislation to the floor and dare their fence-sitting conservative colleagues to vote against it. Wyden drafted the legislation with Rep. Jason T. Smith (R-Mo.), who chairs the tax-writing House Ways and Means Committee, before House passage in January.
“I think we need to call their bluff on it,” Sen. Markwayne Mullin (R-Okla.) said. “There’s a lot of people that may not commit to it until it goes on the floor. I told Wyden to tell Schumer bring it to the floor. Make people vote against the tax bill. I mean, when it comes time to actually make the vote, and you’re going to vote against the tax bill? As Republicans? Let’s try that. Let’s see if you’re really going to do that.”
The bill pairs an expansion to the child tax credit, or CTC – long a major priority for President Biden and other Democrats – with restoring some business tax incentives initially limited in 2017 under President Donald Trump. Negotiators had set a loose April 15 deadline to consider the bill so it could help filers with this year’s tax returns; the Senate’s May work period is widely seen as the bill’s last shot
The CTC increase would allow low-income families to claim the benefit for multiple children; under current law, the lowest-earning families can receive the credit only for one child. Starting in 2025, the benefit would be linked to inflation, which would add up to a roughly $100 jump. Research from economic analysis firm Implan found that expanding the tax credit would boost the U.S. gross domestic product by $11.4 billion and would increase household spending – especially on food and health-care services – by $7.3 billion in its first year.
Nonpartisan estimates say it would lift 400,000 children out of poverty. A previous Biden-era CTC expansion kept 3 million children out of poverty, according to research conducted by Columbia University’s Center on Poverty and Social Policy. The expansion expired at the end of 2021, and child poverty spiked immediately afterward.
“Before we talk about what it means for Washington, let’s talk about what it means for people who are hurting,” Wyden said. “For small-business people who aren’t going to be able to make payroll, what it means for a kid in a large family and they’re not going to get much to get a pair of sneakers or diapers.”
Crapo spokesperson Amanda Critchfield said he “fully supports” the broad idea of extending business tax incentives and expanding the child tax credit but “continues to have policy concerns with the current bill, as do other Republican members, and he has been clear that he would like to find a compromise that a majority of Republican senators can support.”
Business groups in Washington have rallied around the corporate tax provisions. Officials say limiting deductions on research and development have restrained spending on product innovations that could bring down consumer costs. Without them, industry leaders say, small businesses could struggle to afford investments, such as new equipment and larger payrolls.
“The small-business community has been in a bit of a whipsaw between administrations and between different parties in the chambers of Congress. There’s an absolute need for some level of certainty to return to the business community. One of the ways that you do that is through tax policy,” said Joe Shamess, managing partner at Flintlock Capital, a venture capital firm that invests in small businesses.
Hoping to win GOP support, Wyden and Democratic leaders have offered to strip out sections that Crapo and other Republicans opposed – namely a “look back” provision that would allow low-income families to use a prior year’s return to earn a larger tax credit. Conservatives say that would incentivize parents to leave the workforce and still collect the tax benefit.
That change and the business tax measures have kept prospects for the legislation afloat – but barely.
“The tax deal, it’s still alive, but it is true that there is much less chatter about the tax bill and how it might get done,” said Sen. Todd Young (R-Ind.), one the bill’s biggest boosters.
The measure’s backers have focused on Cramer as a Republican who is open to the legislation, but the North Dakotan said he would not want to be part of a renegade faction of the party that bucks Crapo.
“What I don’t want to do is be part of a gang that pieces together nine Republicans” to defeat a filibuster, Cramer said. “I’ve taken the heroic walk plenty of times, and I’m not afraid to do it sometimes, but this was part of our bill. This was something we did, those of us that were here in 2017, and did together, and I don’t want to water it down, particularly when we have a moment when this all comes due in about a year.”
Sen. Susan Collins (R-Maine) said she supported bringing the bill to the floor with amendments to eliminate the CTC provisions “that break the link between the credit and work,” a GOP refrain about the “look back.”
“I think there’s a potential deal to be had here,” said Sen. Josh Hawley (R-Mo.). He also wants to eliminate the “look back” and link the legislation to another bill to compensate victims of nuclear tests and radiation, part of a strategy among bill supporters to attach the tax legislation to other, more broadly popular bills. “That’s doable, totally doable.”
Schumer, though, has signaled reluctance to bring the legislation to the floor without a clear path to winning the 60 votes necessary to defeat a filibuster. He told lawmakers in April that the chamber could consider the bill “in the weeks and months ahead” – without laying out a specific timeline.
(c) Washington Post
