The bipartisan $78 billion child tax credit and business tax bill that passed the House now faces hurdles in the Senate.
The bill was authored by Ways and Means Committee Chairman Jason Smith (R-Missouri) and Senate Finance Committee Chairman Ron Wyden (D-Ore.) and received a bipartisan majority on a 357-70 vote. It passed the House of Commons with support. It has also received support from the White House.
Still, the bill, H.R. 7024, the Tax Relief for American Families and Workers Act, could face several obstacles in the Senate.
Most notably, the bill faces skepticism from Republican senators over the expansion of the child tax credit, particularly a provision that some conservatives argue amounts to welfare expansion and is a disincentive to work. That's what I'm doing. Some have raised objections related to the bill's impact on the budget deficit.
Changes to the carefully negotiated bill could jeopardize bipartisan support.
“There are a lot of issues in the Senate, but this is not a blanket statement,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center.
“Just as the House doesn't like to be 'blocked' by the Senate, the Senate doesn't like to be 'blocked' by the House,” Hoagland said. washington examiner.
Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, said the committee would need to make its own markup on the bill. This would allow senators to vote to change the bill through amendments, a process that could delay the bill's passage.
“Now that the House has passed H.R. 7024, the Senate will proceed with its own process,” Crapo said in a statement. “I look forward to working with my colleagues to scrutinize the law, address concerns, and make necessary changes to build support.”
Some Republican senators, like Crapo, have expressed concern that the bill would allow parents to calculate child tax credits for this year and next based on their previous year's income. Outside conservative groups say the provision will force some parents to quit their jobs after a few years.of wall street journal The Editorial Board attacked this measure in a recent editorial, saying, “Work for one year, get benefits for two years.''
There's also the political reality that this is an election year. Sen. Chuck Grassley (R-Iowa) even suggested that expanding the child tax credit during an election year could improve President Joe Biden's chances of staying in office.
“If we pass a tax bill that makes the president look good and mail the checks before the election, that means he can be re-elected,” Grassley told reporters. “We will not extend the tax cuts.”
If the bill is signed into law, the Biden campaign could emphasize that he and Democrats helped expand the child tax credit. If that fails, the campaign could accuse Republicans of blocking an expansion of the child tax credit or other tax provisions favored by corporations.
Another concern for Republicans is the bill's fiscal impact.
The bill would be paid for through pandemic-era changes to the Employee Retention Tax Credit (ERC). This cost will be offset by the ERC's increased enforcement and penalties for fraudulent claims, resulting in an early termination of claims processing.
Congress' in-house tax scorekeeper, the Joint Committee on Taxation, estimates that the ERC changes would result in savings of just over $77 billion, making the entire bill deficit-neutral. But some Senate Republicans believe the provision is deceptive because it would only roll back pandemic-era programs that had already increased debt.
“This is kind of a bogus payoff,” Sen. John Cornyn (R-Texas) said, according to the newspaper. hill. “That's because the original tax credits made during the pandemic were not paid. So it seems like smoke and mirrors to now say that unpaid tax credits can be used to make this payment.”
The bill was written so that the tax cuts would expire in 2025, but the Committee for a Responsible Federal Budget, an outside group that advocates for deficit reduction, estimates that if the tax cuts were made permanent, they would expire in 2033. It is expected to cost $645 billion. .
Still, despite the obstacles, there is hope from some in the tax community that the bill, or at least some form of it, will eventually pass.
“I think Congressional Republicans want to prove they can govern. I think Senate Republicans don't want to kill popular bipartisan legislation,” said Republican strategist and partner at Firehouse Strategies. said Alex Conant. washington examiner.
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Conant said Senate Republicans may try to make some tweaks to the bill, but noted that unlike the House, Republicans are in the minority in the Senate.
“I think ultimately the Senate will pass this bill,” he said. “I think the most likely scenario is for the Senate to pass the House bill.”
