The House tax-writing panel has scheduled a meeting Friday to work on and advance the major bipartisan proposal that would expand the child tax credit and renew prized business investment deductions.
The Ways and Means Committee will hold the session, in which members of the tax-writing committee will get their chance to weigh in on the legislation, on Friday, a Ways and Means aide confirmed to the Washington Examiner.
The markup, as such hearings are known, will be much-watched because it will give a sense about the likelihood of the proposal passing.
While some in leadership, such as Sen. Chuck Schumer (D-NY), have endorsed the plan, many lawmakers have not yet voiced their position on the matter.
The markup will also show potential fissures or points of debate within the legislation, which is a $600 billion plan that has been long in the making. Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) worked to craft a plan that would attract enough support to pass, although there will likely be lawmakers who oppose it from both the Left and the Right.
The plan, as it is currently envisioned, would expand the child tax credit by changing the calculation of the credit on a per-child basis to make it more generous. It would also increase 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).
The plan also includes some major expired business tax provisions that would be restored.
A tax deduction for research and development costs is one of the business-side proposals. Republicans had made restoring the deduction a major priority. After it expired, companies have had to amortize R&D expenses, meaning they faced a higher tax burden.
The agreement would also temporarily halt the phase-out of bonus depreciation. That is the feature of the Trump tax cuts that allowed companies to write off certain capital expenditures immediately instead of having those deductions written off over the “useful life” of the asset.
While Smith and Wyden support the bill, their respective counterparts on the committee — Ways and Means ranking member Richard Neal (D-MA) and Finance Committee ranking member Mike Crapo (R-ID) — have not committed to it.
Crapo said in a statement that the plan is “a thoughtful starting point” and that he would work “to build broad, bipartisan support for a tax package that provides appropriate relief for working families and businesses.”
Neal has said a bigger increase in refundability to the child tax credit would engender more support from Democrats for the plan.
Democrats temporarily boosted the child tax credit on a partisan basis in 2021. Republicans previously bolstered the credit to the level it is at now via the Trump tax cuts.
As part of the Democrats’ temporary boost, Congress raised the child tax credit to $3,600 for children under 6 and $3,000 for older children, with perhaps the biggest change being the removal of an income threshold for those who receive the funds. That meant that a family with no income or head of household working also received the full $3,600 or $3,000 payments.
Since the 2021 boosted credit, many Democrats have dug in their heels in pushing for another increase of the same or nearly the same magnitude. Republicans have drawn a line in the sand as it pertains to work requirements. That was one reason why the tax deal was notable — it attracted Wyden’s stamp of approval while keeping work requirements in place.
Some Democrats who are staunch advocates of a bigger child tax credit have already come out against the plan. Rep. Rosa DeLauro (D-CT) said in a statement that there needs to be a credit that is the same scale as in 2021.
“The deal that has been announced fails to improve the child tax credit,” she said. “Millions of children would be left in preventable poverty because of a policy choice, all while giant corporations who do not pay any taxes get a massive tax break.”
Ahead of the plan’s release, Sen. Elizabeth Warren (D-MA) blasted the business tax credits that were expected to be included in it.
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“The Republicans have decided that the only way to help poor children is if giant corporations will get out billions of dollars in tax rebates. That’s the wrong approach,” Warren said, according to Roll Call.
Wyden has said that he wants to see the legislation passed into law in time for tax filing season.