The U.S. House on Wednesday, Jan. 31, 2024 voted to approve a tax package that would expand the current child tax credit for three years. (Photo of 1040 form by Getty Images)
WASHINGTON — The U.S. House voted overwhelmingly Wednesday to approve a $78 billion tax package that would expand the child tax credit and reinstate some tax incentives for businesses.
The 357-70 vote sends the bill, dubbed the Tax Relief for American Families and Workers Act of 2024, to the U.S. Senate, where lawmakers are expected to vote on it at some point, though passage isn’t guaranteed.
House debate on the 84-page measure was broadly bipartisan, with both Democrats and Republicans backing the agreement between Missouri Republican Rep. Jason Smith, chairman of the House’s tax-writing committee, and his Senate counterpart, Finance Chairman Ron Wyden, an Oregon Democrat.
Members of both political parties also spoke against the bill, with several far-right lawmakers arguing the expansion of the child tax credit would broaden the “welfare state” and progressive Democrats saying the bill didn’t go far enough to provide relief to low-income and working families.
“Each of these policies will help American business, grow, create jobs and sharpen their competitive edge against China,” Smith said.
The child tax credit expansion, he said, continues provisions that Republicans put into the 2017 tax law they passed during the Trump administration, while updating some of the language.
“We maintain work requirements while enhancing the benefit to support families crushed by today’s inflation and remove the penalty for families with multiple children,” Smith said.
Massachusetts Rep. Richard Neal, the top Democrat on the tax- writing committee, said the expansion of the child tax credit would immediately help 16 million children throughout the country.
“This is not the bill I would have written, but this is sensible policy,” he said of the overall package.
Neal sharply criticized the far-right Republicans who spoke out against the measure during floor debate and called the CTC “welfare.”
“I can’t believe that we would stand here tonight and hear that addressing childhood poverty is welfare,” Neal said.
Freedom Caucus Chair Bob Good of Virginia, Matt Gaetz of Florida, Thomas Massie of Kentucky, Scott Perry of Pennsylvania and Chip Roy of Texas were among the Republicans who argued against passage during floor debate.
They all expressed frustration that child tax credit payments could go to undocumented immigrants, even though a provision from the 2017 GOP tax law requires the child to have a Social Security number. And several criticized the tax credits for businesses as well.
“Little kids don’t get the checks sent to them even though they have a Social Security number. But their parents, who are here illegally, do,” Perry said.
Georgia Republican Rep. Drew Ferguson vehemently rejected the criticism, saying he didn’t worry “one single bit about making sure that American business is more competitive on the global stage.”
“This is not about giving business a tax break, this is about investing in America and American jobs,” Ferguson said. “And the complete mischaracterization about the child tax credit is the most intellectually dishonest conversation that I have heard on this floor in a very long time.”
“This is about making sure that people that work and their families have the ability to get ahead,” Ferguson added.
Connecticut Democratic Rep. Rosa DeLauro, one of the more progressive members of the House and a longtime advocate for the CTC, also said she couldn’t support the bill, arguing it was a “mockery of who representative government works for.”
“I cannot vote for a deal that so lopsidedly benefits big corporations while failing to ensure a substantial tax cut to middle- and working-class families,” DeLauro said. “The deal is inequitable at a time when we’ve seen a rise in inequality.”
Should Congress clear the bill, President Joe Biden is likely to sign it.
White House press secretary Karine Jean-Pierre said in mid-January the legislation was a “welcome step forward.”
“And we believe Congress should pass it,” she said.
The bill would expand the current child tax credit, which is up to $1,600 per child, to a maximum of $1,800 in 2023, $1,900 in 2024 and $2,000 in 2025. The expansion would expire after that.
The three-year expansion of the child tax credit would not reach the level Congress approved during the COVID-19 pandemic, when it reached a maximum $3,000 or $3,600 for children under 6 years old.
The bill includes several tax incentives for businesses, including a provision that would immediately allow businesses to deduct research and development investments made within the United States.
The bill would “??strengthen America’s competitive position with China by removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan,” according to a summary of the legislation.
The legislation would help make housing more affordable through an enhancement of the low-income housing tax credit and other provisions.
Parts of the legislation are intended to help communities recover from natural disasters, including tax relief for families harmed by hurricanes, wildfires, flooding or the train derailment in East Palestine, Ohio.
The legislation would be paid for by ending a tax break for businesses that kept their employees during the COVID-19 pandemic, known as the employee retention tax credit. The law would end the ability for businesses to file new claims on Jan. 31 instead of April 15, 2025.
The House Ways and Means Committee voted 40-3 in mid-January to send the legislation to the floor.
Senate Majority Leader Chuck Schumer, a New York Democrat, said Wednesday he supports the tax bill and will be working to figure out when and how it should move to the floor for a vote.
Wyden, chairman of the Senate’s tax-writing committee, said he’ll be talking with Schumer to determine if there will be amendment votes on the package. But he said he wants to see it get a vote “as quickly as possible.”
Wyden also rejected some criticism of the bill not having a more significant expansion of the child tax credit, noting that it lasts for three years and Congress will need to renegotiate on tax policy after that.
“We got kids that need diapers and shoes and paying for essential (and) small businesses that are trying to compete with China,” Wyden said. “I gotta say, ‘Get on with it,’ ‘Get it done.’”
West Virginia Republican Sen. Shelley Moore Capito said she hopes the Finance Committee holds a markup before the bill moves to the Senate floor.
“I think they need to move it through Finance and have an amendment process without having everything all pre-decided,” Capito said. “That’s what bothers people when they’re trying to make policy, they don’t have any opportunities to weigh in. So I’m for the committee process. Bring it over and let it go through committee.”
North Carolina Republican Sen. Thom Tillis said he has several concerns with the bill, including that it’s “not comprehensive enough.” He said he hopes leaders will hold amendment votes on the floor.
“I’ve been saying it’s a mistake. I also think the pay-for is fake,” Tillis said. “I mean, it’s a program that we didn’t pay for when we were doing the COVID bills that we’re now considering a pay-for. And most of that is actually clawing back fraud and abuse.”
“Here’s a concept — why don’t we just send that back to the Treasury and start filling in the $34 trillion hole we have,” Tillis said, referring to the national debt.
Indiana Republican Sen. Todd Young said he and Idaho Sen. Mike Crapo, the top Republican on the tax-writing committee, are hoping to make changes to the legislation once it arrives in their chamber.
“We’re still hoping to make improvements,” Young said, though he declined to detail what changes he wants to make to the tax package. “I’m not going to elaborate.”
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