Thu. Jun 20th, 2024

Congress nears $70 billion deal on child tax credit and business tax breaks

By 37ci3 Jan12,2024

WASHINGTON — Congressional leaders are nearing a $70 billion bipartisan and bicameral deal that would extend the child tax credit through 2025 and provide tax breaks for businesses, three sources with knowledge of the talks told NBC News.

The package, negotiated by members of the Democratic-led Senate Finance Committee and the Republican-led House Ways and Means Committee, is evenly split between key Democratic demands, increasing the child tax credit that dramatically reduces childhood poverty and securing new tax breaks favored by businesses that Republicans want in return.

“It looks good,” House Taxpayer Ways and Means Committee Chairman Jason Smith, R-Mo., said of the potential deal.

Senate Finance Chairman Ron Wyden, D-Ore., said he has been pursuing this tax deal for 18 months and plans to complete it on Jan. 29.

“We’re working on a very specific goal, which is to get it done in time for filing season,” he said. “And I’m going to pull out all the stops and stay there every day.”

The emerging, fluid agreement aims to provide targeted assistance to needy families and large families. It increases refundable child tax credits and gradually lifts the $1,600 limit on refundable credits. It also allows taxpayers to use a prior year’s income if it allows for a larger benefit. Children’s monthly cash payments Those sent to families for six months in 2021, however, are not part of the negotiations.

The business interruptions will revive some policies under the Trump tax cuts that expired in 2017. They would allow full spending on domestic research and development, restore the pre-2017 rate cut, expand bonus depreciation and expand small business spending, sources said.

The resulting deal represents a rare attempt at major bipartisan legislation in a divided Congress struggling to get the administration’s basics done. It is also a product of stimulus alignment. Democrats are eager to roll back the expanded child tax credit after implementing a major benefit for one year. drastically cut child poverty before the tax credit Ended in 2022, raises again. Republicans, who unanimously rejected previous child cash payments, are looking to deliver on their traditional business allies in an election year after struggling to pass new laws after retaking the House.

“I’m very committed to trying to make decisions on tax policies,” said Sen. Mike Crapo, R-Idaho, the ranking member of the Finance Committee. “It’s very important.”

Crapo confirmed that the talks included changes to business tax credits and the child tax credit, but would not go into details.

“Negotiations are ongoing. They were. And I hope that we will come to a decision,” he said. “But there are many problems. There are many perspectives.”

The child tax provisions attempt to address the fact that the refundable credit for low-income families is less than the refundable credit for middle- and higher-income families. A priority for Democrats is getting the biggest possible reduction in child poverty with an expanded child tax credit, one of the sources said.

Lawmakers are 90% of the way there, the source said, but some key threats are the Democratic push for housing and the Republican tax push for disaster cleanup.

Some prominent liberals lamented that the resulting deal gave too many tax breaks to corporations.

“My biggest concern is that our tax cuts are going to the largest corporations,” said Rep. Rosa DeLauro, D-Conn., an active supporter of the child tax credit. “It puts working families, vulnerable families, middle-class families at risk.”

Sen. Maggie Hassan, a member of the Finance Committee, defended the business provisions, which reflect cross-party support for various articles of the deal.

“The fact that we reached a strong, bipartisan deal to restore the R&D deduction is an important step forward,” Hassan told NBC News. I will continue to work with his people.”

“I hope that Speaker Johnson and others in the Republican leadership will listen to the calls from both sides of the aisle and act on this,” he said.

Rep. Katie Porter, D-Calif., a rare single mother in Congress, said she supports tax policies that make it easier to raise families — but she wants to avoid “sweetheart deals” for businesses.

“I’m clearly in favor of the child tax credit if it works. And what this place needs to do is invest in policies that work and turn off tax dollars for policies that don’t. So I was very happy to hear about it,” he said. “I don’t think we need to cut any deals to make it easier for Americans to raise their families.”

Sen. Sherrod Brown, D-Ohio, who participated in the debate, said his priority is to help families raising children.

“We help take away the child tax credit,” he said. “So this is going to be a huge win for middle-class Americans.”

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By 37ci3

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