The $78 billion child tax credit and business tax bill is entangled in complex politics
Election-Year Politics Threaten Passage of Bipartisan Child Tax Credit and Business Tax Break Bill
The bipartisan $78 billion child tax credit and business tax break bill is facing obstacles in both the Senate and the House, despite receiving overwhelming support from the House Ways and Means Committee in a 40-3 vote.
If passed, the legislation would be a major victory for Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR), who spent weeks negotiating the plan.
Additionally, the White House stands to gain a political advantage from the bill, regardless of its outcome. If signed into law, President Joe Biden’s campaign can highlight his role in expanding the child tax credit. If it fails, Democrats can blame Republicans for blocking important tax provisions.
However, the White House’s support of the legislation complicates matters for other Republicans. They are grappling with how to approach the bill without giving Biden a win or appearing to be in agreement with him.
Challenges for House Speaker Mike Johnson
House Speaker Mike Johnson (R-LA) has not yet endorsed the legislation, as he faces challenges within his own party. He has already clashed with the conservative Freedom Caucus over government funding, and supporting greater refundable child tax credits could further strain relations.
G. William Hoagland, senior vice president at the Bipartisan Policy Center, acknowledges the difficulties Johnson faces in getting the bill out of the House.
Concerns and Criticisms
Some Republicans have reservations about the child tax credit expansion, particularly the increase in the maximum refundable amount per child. They argue that refundable tax credits resemble government handouts.
Critics, including the Wall Street Journal’s editorial board, also take issue with the provision that allows parents to use the prior year’s income to calculate the credit for the current year and the next. They argue that this allows individuals to benefit from work done in one year for two years.
Another objection raised by Republicans is the potential eligibility of U.S.-born children of illegal immigrants for the child tax credit. However, it is important to note that this has been the case for years and is not changed by the legislation in question.
Political Challenges for Republicans and Democrats
The temporary expansion of the child tax credit under Biden’s coronavirus relief bill complicates the politics surrounding the current plan. Republicans, who previously supported the credit, now find it difficult to align themselves with a policy seen as a progressive priority.
On the other hand, some Democrats believe the current bill does not go far enough in expanding the child tax credit and want a repeat of the 2021 expansion. Additionally, there are Democrats who oppose the business tax cuts included in the legislation.
Desire for Accomplishments in the House
House Republicans are eager to demonstrate their ability to govern and deliver results to their constituents. The child tax credit bill provides an opportunity for them to achieve a tangible accomplishment that will be well-received by their constituents.
While the House side may find it easier to pass the bill, the Senate is more focused on the broader political environment and the potential impact on the upcoming elections.
Business Community’s Influence
The business community is exerting pressure on Republicans to pass legislation that restores key tax incentives. Delivering for their business constituents would be a significant political win for Republicans, outweighing any potential backlash from their base regarding the expanded child tax credit.
If negotiations fail and the legislation is not passed, the issue will be postponed until 2025, when more provisions from the Trump tax cuts will expire, necessitating the crafting of a major fiscal legislative bill.
Overall, progress on this bill would serve as a “down payment” for future discussions in 2025.
What are the potential implications for families and businesses if the child tax credit and business tax breaks included in the bill are passed into law
The child tax credit. They argue that this could incentivize illegal immigration and provide financial support to those who are not legally residing in the country.
Political Motivations
The obstacles faced by the bipartisan bill are largely attributed to the political climate surrounding the upcoming midterm elections. Many lawmakers, particularly those in competitive districts, are hesitant to support legislation that could potentially be used against them by their opponents in their reelection campaigns.
Furthermore, the polarization in Congress has made it increasingly difficult to pass bipartisan legislation. Both parties are wary of giving the other side a win, even if it means sacrificing potentially beneficial legislation.
Implications for Families and Businesses
The child tax credit and business tax break bill has the potential to significantly impact families and businesses across the country. The expansion of the child tax credit could provide much-needed financial assistance to low-income families, helping to alleviate the financial strain of raising children.
Similarly, the business tax breaks included in the bill could incentivize investment and job creation, particularly for small businesses. This could stimulate economic growth and provide a boost to struggling industries.
The Path Forward
In order for the bipartisan bill to become law, it will require the support of both Democrats and Republicans in both the House and the Senate. However, with the political motivations at play, this may prove to be a challenging task.
It is crucial that lawmakers prioritize the needs of the American people over political considerations. The child tax credit and business tax break bill has the potential to provide substantial benefits to families and businesses, and it would be a disservice to the American people if it is derailed solely due to election-year politics.
Ultimately, it is important for lawmakers to put aside their differences and work towards a compromise that benefits the American people. By prioritizing the passage of this bipartisan bill, Congress can demonstrate its commitment to the wellbeing of families and businesses, regardless of the political climate.
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