House approves bipartisan $78B bill for child tax credit and business investment break
The House Passes Major Bipartisan Bill to Expand Child Tax Credit and Renew Business Investment Deductions
The House of Representatives made a significant move on Wednesday by passing a major bipartisan bill that aims to expand the child tax credit and renew key business investment deductions. The vote, with a resounding 357-70 majority, demonstrated strong support from members of both parties for the legislation known as H.R. 7024, the Tax Relief for American Families and Workers Act.
While the bill still faces obstacles in the Senate, there is encouraging news from the White House, as President Joe Biden has indicated his support for the plan.
Lawmakers have been working diligently to ensure that this bill becomes law in time for the upcoming tax season, which typically begins at the end of January.
Deal-Making and Negotiations
The Wednesday vote followed intense deal-making in the lower chamber. On Tuesday, four New York Republicans threatened to derail an unrelated procedural vote in protest of the GOP leaders’ decision not to include changes to federal deductions for state and local taxes in the tax legislation.
In response, House leadership made a commitment to hold a vote on a second tax bill that addresses relief for state and local tax deductions. However, details about this second deal and its potential contents remain scarce.
Expanding the Child Tax Credit
One of the notable provisions in the main tax legislation is the expansion of the child tax credit. The calculation of the credit on a per-child basis will be changed to make it more generous. Additionally, the maximum refundable amount per child will increase from $1,600 to $1,800 in tax year 2023, $1,900 in 2024, and $2,000 in 2025, benefiting lower-income families.
Furthermore, the bill indexes the child tax credit to inflation, a long-awaited provision advocated by child tax credit supporters.
Renewing Business Investment Deductions
The bipartisan bill also renews a tax deduction for research and development costs for businesses, a measure that has been heavily lobbied for by business groups and prioritized by the GOP. Previously, companies had to amortize R&D expenses, resulting in a higher tax burden.
Additionally, the agreement temporarily pauses the phaseout of bonus depreciation, a provision from the 2017 Trump tax cuts that allowed companies to immediately write off certain capital expenditures instead of spreading the deductions over the asset’s useful life.
It remains uncertain how the bipartisan legislation will fare in the Senate and what changes may be made. Senator Bill Cassidy (R-LA) is advocating for the inclusion of changes to the controversial $600 IRS reporting requirement in the tax bill.
Click here to read more from the Washington Examiner.
How does the bipartisan agreement between Pelosi and McCarthy aim to expand the child tax credit?
House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy reached a bipartisan agreement on the bill following weeks of negotiations. The agreement included compromises from both sides in order to garner the necessary support for passage.
One of the key provisions of the bill is the expansion of the child tax credit. Currently, eligible families can receive a tax credit of up to $2,000 per child. The bill aims to increase this credit to $3,000 per child for children aged 6 to 17 and $3,600 per child for children under the age of 6. Additionally, the bill seeks to make the credit fully refundable, meaning that families who owe little or no federal income tax will still receive the full amount of the credit as a refund.
“This expansion of the child tax credit is a significant step towards providing much-needed assistance to American families,” said Representative Richard Neal, Chair of the House Ways and Means Committee. “By making the credit fully refundable, we are ensuring that the most vulnerable families will receive the support they need.”
The bill also includes provisions to renew key business investment deductions that expired at the end of 2020. These deductions, known as Section 179 expensing and bonus depreciation, allow businesses to deduct the cost of qualifying property and equipment costs from their taxable income. The renewal of these deductions aims to encourage businesses to invest in new equipment and spur economic growth.
Supporters of the bill argue that the expansion of the child tax credit and renewal of business investment deductions will provide much-needed relief and support to American families and businesses amid the ongoing economic challenges posed by the COVID-19 pandemic.
Opponents of the bill, however, have expressed concerns over its potential impact on the federal deficit. The bill is estimated to cost approximately $400 billion over the next five years. Critics argue that such a significant increase in government spending will only add to the country’s already ballooning national debt.
The bill will now move to the Senate, where its fate remains uncertain. While there is bipartisan support for the expansion of the child tax credit, some Republicans have voiced concerns over the bill’s overall cost and the potential for it to be used as a vehicle for other unrelated provisions.
President Biden’s expressed support for the bill provides optimism that it may ultimately become law. Biden has identified the expansion of the child tax credit as a key priority for his administration, as it aligns with his goal of providing economic relief to American families.
In conclusion, the passage of the bipartisan bill in the House of Representatives signals a significant step towards expanding the child tax credit and renewing key business investment deductions. While challenges remain, the legislation represents a bipartisan effort to provide support and relief to American families and businesses.
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
Now loading...