The Biden administration called on Congress to pass bipartisan legislation to expand the child tax credit and renew investment deductions prized by the business sector.
A White House spokesman said that the bill, which advanced out of the Ways and Means Committee on Friday afternoon in an overwhelming 40-3 vote, would “lift hundreds of thousands of children out of poverty.”
“We are also pleased that the proposed tax package is fully paid for with other revenue measures, consistent with the president’s commitment to fiscal responsibility,” spokesman Michael Kikukawa said. “While the president will continue to fight to restore the full expanded child tax credit that helped cut child poverty in half, the bipartisan tax bill is a welcome step forward, and Congress should pass it.”
The legislation, dubbed the Tax Relief for American Families and Workers Act, was negotiated between Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) and would expand the child tax credit while also renewing key business tax provisions that had expired.
There was some concern that the bill could end up facing a difficult path toward passage, although the fact that 93% of the tax-writing panel supported the plan is a good omen for the bill’s chances on the House and Senate floors.
President Joe Biden’s stamp of approval could also broaden Democratic support for the package in Congress, making the bill’s passage even more likely.
The agreement is the most likely shot that Democrats have at expanding the child tax credit before the next Congress, and Republicans might not be able to restore those business provisions, a major priority for them, without the legislation as well.
The bill enhances the child tax credit by changing the calculation of the credit on a per-child basis to make it more generous. It also increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in 2024, and $2,000 in 2025.
Refundability is the ability for households with no tax liability to receive a check from the government. The new proposal raises the current $1,600 cap on the amount of the credit that is refundable. The change would most benefit lower-income families, given they pay little to nothing in income taxes.
Still, the White House’s statement acknowledges that the latest piece of legislation falls far short of the temporary child tax credit expansion that came as part of the 2021 American Rescue Plan Act, the Democratic pandemic relief bill.
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That expansion raised the credit to $3,600 for children under 6 and $3,000 for older children — but perhaps the biggest change was the removal of an income threshold for those who receive the funds. This meant that there was no work requirement in place like there is now and has been in the past.
It is unclear when the House, which isn’t back in session until Jan. 29, will take up a vote on the legislation. House Speaker Mike Johnson (R-LA), who has been busy trying to avoid a government shutdown, has been quiet about the Wyden-Smith bill.