A $78 billion tax cut package received bipartisan support in the House of Representatives and already has White House support, but Republicans are doing whatever they can to block it in the Senate. Here’s what you need to know about this month’s cat-and-mouse chase between Democrats and the GOP.
Tax Relief for American Families and Workers Act
The new tax bill is being dubbed the ‘Tax Relief for American Families and Workers Act.’ It was created by House Ways and Means Committee Chair Jason Smith (R-MO) and Senate Finance Committee Chair Ron Wyden (D-OR).
If passed, the bill would temporarily expand the child tax credit (ensuring families see a bigger tax break in 2025 and beyond) and restore a number of business tax benefits (ensuring businesses aren’t left out of the deal).
Beefing Up The Child Tax Credit
American families would benefit in several ways. Most notable is that it would increase the maximum refundable credit for households who owe little or no income taxes, which means low-income families would be able to claim more.
According to CNN, the bill would lift more than 500,000 children out of poverty and improve the lives of more than five million more by 2025. The child tax credit would also be adjusted based on inflation, meaning those not in low-income households would also benefit.
Cutting Taxes For Businesses
As for American businesses, they would gain the ability to immediately deduct 100% of their investments in US-based research and experimentation, machinery, and equipment. They’re currently allowed to deduct those investments over the course of five years.
The bill would also relax the tightened limits on the deductibility of interest expenses, increase the amount of investment a small business can immediately write off, and provide relief for those affected by disasters – including any recent hurricanes and floods.
House Passed The Tax Bill In January
The bill has already made its way through the House of Representatives – and it did so with an overwhelming amount of bipartisan support. All in all, 357 representatives voted in favor of the bill, while just 70 voted against it.
“The numbers speak for itself, it shows that when you’re trying to deliver for the American people, people will join together and that’s what we saw today,” Jason Smith said to reporters after the vote was finalized. When he was done talking, he walked into a room full of cheers.
Chip Roy Says Package Does Too Much For Families
Rep. Chip Roy, who has served Texas’s 21st congressional district since 2019 and is a current member of the conservative House Freedom Caucus, wasn’t too fond of the provisions to the child tax credit – which he says the people he represents are tired of.
He argued that ‘expanding the child tax credit’ will ‘continue to fund people directly through refundable credits’ – which he describes as ‘problematic.’ He also thinks it ‘undermines the kind of economic activity and incentive to work and incentive to, you know, produce value.’
Rosa DeLauro Says Bill Doesn’t Do Enough
On the other hand, Rep. Rosa DeLauro, who has served Connecticut’s 3rd congressional district since 1991 and is a ranking member of the House Appropriations Committee, says the bill doesn’t quite do enough for American families.
“There is inequity. They have moved in the direction of saying to the biggest corporations, ‘You get everything you want and more,’” she said – arguing that businesses get to see their benefit immediately, while families have to wait for their benefits to phase out.
Jason Smith Urges Senate To Pass The Bill
While the bill was passed by the House of Representatives in January, it won’t find its way to President Joe Biden’s desk until the Senate passes it. That’s why Smith has been meeting with Republican Senators – urging them to do the right thing.
“When we first originally started out it was going to be $47 billion on the business and $47 billion on the child tax credit and Senate Republicans said no, it needs to be around $30 billion and so that’s why we moved it down to $30 on each side,” he said.
Republican Senators Reluctant To Vote Yes
Republicans have a history of blocking anything the Democrats try to pass through the Senate – even if it sees bipartisan support in the House. Unfortunately, that’s exactly what we’re seeing with the Tax Relief for American Families and Workers Act.
The primary reason is they want bigger tax benefits for businesses. Since they’re confident they’ll win the Senate majority next year, they’re trying to kick the can down the road so they can do what they want with the bill. They also don’t want to give the Democrats a political win.
Mike Crapo Leading The Opposition
Sen. Mike Crapo (R-ID), the top Republican on the Senate Finance Committee, has been leading the opposition to the child tax credit expansion. In March, he sent key Democrats a list of changes he would like to see in the bill.
One of those changes would require parents of children who receive the credit to supply Social Security Numbers to verify their immigration status. He also wanted to rescind the retroactive break for 2023 – but Democrats weren’t interested.
McConnell And Thune Support Crapo’s Provisions
Two other Republican Senators who are leading the opposition are Minority Leader Mitch McConnell (R-KY) and Minority Whip John Thune (R-SD). They were once considered supporters of the bill, but are now considered heavy opposers of it.
Some people think Thune is following McConnell in hopes of replacing him as Senate Republican leader. McConnell will step down in November after nearly 18 years – making him the longest-serving Senate party leader in U.S. history.
Democrats Need At Least Nine Republicans
While Republican Senators are expected to filibuster the proposed tax cut package, Democrats are hoping they can gain enough support to prevent that. In terms of votes, that means they’ll need at least nine Republicans to go against their party leader.
“For one it breaks the dam. There has not been any kind of even a small extenders package passed in three years and let alone in divided government. And so 2025 is the Super Bowl of tax,” Jason Smith said of the bill.
Businesses Lobbying Hard For GOP Support
More than 250 American businesses, including the US Chamber of Commerce, the Business Roundtable, and the National Association of Manufacturers, are lobbying hard to ensure bipartisan support once the bill hits the Senate floor.
For example, the National Association of Manufacturers ran an ad in several states – including Kentucky, which McConnell represents – in hopes of raising awareness and gaining support.
Time Is Of The Essence
Those who support the bill are waiting for Majority Leader Chuck Schumer (D-NY) to bring it to a vote. It’s unlikely to pass if he does it right away, but the impeachment trial of Homeland Security Secretary Alejandro Mayorkas starts on April 11 – so it’s a battle of time right now.
Rohit Kumar, a former top aide to McConnell, says Schumer has no other option but to bring it to a vote now. “To me, it’s almost like legislative malpractice not to file,” he said, adding that if he doesn’t, Schumer would become a ‘co-conspirator in the death of the bill’.
