Unbelievable: House Actually Agrees on Something Big: New Bill Promises Huge Perks for Families and Businesses!

LookerStudio / shutterstock.com
LookerStudio / shutterstock.com

The House of Representatives passed a significant tax reform bill with broad bipartisan support to enhance the child tax credit for American families and reinstate specific business tax reductions. The Bill, known as the Tax Relief for American Families and Workers Act, passed with a vote of 357-70 and was the result of negotiations between Representative Jason Smith, a Republican from Missouri, and Senator Ron Wyden, a Democrat from Oregon.

This broad endorsement was essential because Republicans advanced the Bill using a

“suspension process,” which requires a two-thirds vote instead of just a simple majority. This method underscored the need for substantial bipartisan agreement within the GOP-majority House.

Three Key Aspects of the Tax Bill

#1 Expansion of the Child Tax Credit:

The Bill proposes a significant expansion of the child tax credit, aiming to provide substantial financial support to lower-income families. This move is seen as a direct effort to reduce child poverty and assist families struggling with economic hardships. It proposes to increase the refundable child tax credit to $1,800 per child in 2023, $1,900 in 2024, and $2,000 in 2025, with adjustments for inflation in the latter two years.

#2 Restoration of Business Tax Benefits:

The legislation seeks to restore key business tax benefits that have either ended or are phasing out. The Bill offers to extend business tax breaks through 2025, including measures to foster trade with Taiwan. Other benefits include:

  • Allowing businesses to deduct the cost of U.S.-based research and investments immediately.
  • Restoring the ability to fully deduct investments in machinery and equipment immediately.
  • Relaxing limits on the deductibility of interest expenses.

These measures are designed to stimulate business investment and research, which are crucial for economic growth and competitiveness.

# 3 Natural Disasters:

Victims of wildfires and the Norfolk Southern train derailment in East Palestine, Ohio, will receive tax relief. Disaster relief payments will not count toward their taxable income.

Funding for these provisions would be financed by ending the employee retention tax credit, a pandemic-era initiative aimed at incentivizing employers to retain their workforce, which has been plagued by fraudulent activity.

Political and Legislative Challenges:

In today’s polarized political climate, it is rare for legislation to pass the House with overwhelming bipartisan support. The Bill is expected to face major obstacles in the Senate. Opposition to the Bill comes from different quarters: Ultraconservative Republicans are against the expanded child tax credit, fearing it benefits undocumented immigrants, despite the credit not applying to undocumented immigrants and only being available for children with social security numbers. Progressive Democrats, meanwhile, argue that the Bill falls short of expanding the tax credit and disproportionately favors corporations.

Committee vs. Floor Debate:

Some senators are arguing that the Bill should go through the traditional committee process, as this would allow for a more thorough examination and debate of its provisions. Others see this as a potential delay tactic in an already tight legislative calendar.

Fiscal Concerns:

The opposition centers on questions about financing the expanded child tax credit and restoring business tax benefits. Republicans like Sen. Marco Rubio emphasize the need for a work requirement for the child tax credit. Sen. Mitt Romney and others are concerned about creating new entitlements without adequate funding.

#4 Election Year Dynamics:

The timing of the Bill in an election year adds an additional layer of complexity. While some see the child tax credit expansion as a potential political win for President Joe Biden, others are wary of passing significant legislation that could impact the fiscal landscape and the election outcome.