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U.S. House Passes Tax Package Expanding Child Tax Credit



U.s. House Passes Tax Package Expanding Child Tax Credit

The U.S. House of Representatives has overwhelmingly voted to approve a tax package aimed at expanding the child tax credit and reinstating tax incentives for businesses. The bill, known as the Tax Relief for American Families and Workers Act of 2024, now heads to the U.S. Senate where it will be voted upon. However, the outcome is uncertain. All 14 representatives from North Carolina voted ‘yes’ except for Dan Bishop who voted ‘no’.

The debate in the House was bipartisan, with support coming from both Democrats and Republicans. The agreement was reached between Jason Smith, the House’s tax-writing committee chairman, and Ron Wyden, the Senate’s Finance Chairman and a Democrat from Oregon.

While the bill received broad support, there were also lawmakers from both parties who expressed their opposition. Some members of the far-right argued that the expansion of the child tax credit would contribute to a bigger “welfare state,” while progressive Democrats felt that the bill fell short in providing adequate relief to low-income and working families.

Massachusetts representative Richard Neal, the top Democrat on the tax-writing committee, highlighted that the expansion of the child tax credit would immediately benefit 16 million children in the country. Despite having reservations, he deemed the bill a sensible policy.

A group of Republicans, including Bob Good, Matt Gaetz, Thomas Massie, Scott Perry, and Chip Roy, expressed concerns about the child tax credit payments potentially going to undocumented immigrants, although the 2017 GOP tax law requires the child to have a Social Security number. They also criticized the tax credits for businesses.

Meanwhile, Drew Ferguson, a Republican representative from Georgia, rejected the criticism, emphasizing the importance of making American businesses more competitive globally. He argued that the bill aimed to invest in America and American jobs. He also deemed the mischaracterization of the child tax credit as “intellectually dishonest.”

Rosa DeLauro, a Democratic representative from Connecticut, voiced her opposition to the bill, stating that it disproportionately benefits big corporations while failing to provide substantial tax cuts to middle- and working-class families. According to DeLauro, the bill exacerbates inequality at a time when it is on the rise.

If the bill is passed by Congress, President Joe Biden is expected to sign it. In mid-January, White House press secretary Karine Jean-Pierre expressed support for the legislation and urged Congress to pass it.

The tax package includes an expansion of the child tax credit, increasing the maximum amount from the current $1,600 per child to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025. This expansion will last for three years. However, it falls short of the level approved during the COVID-19 pandemic, which reached a maximum of $3,000 or $3,600 for children under 6 years old.

Additionally, the bill includes several tax incentives for businesses, such as immediate deductions for research and development investments made within the United States. It also aims to strengthen America’s competitive position with China and make housing more affordable through the enhancement of the low-income housing tax credit.

The legislation also contains provisions to help communities recover from natural disasters, offering tax relief to families affected by hurricanes, wildfires, flooding, or the train derailment in East Palestine, Ohio.

To offset the costs, the bill would end the employee retention tax credit for businesses that kept their employees during the pandemic. This tax break would no longer be available for new claims after January 31, 2025.

The House Ways and Means Committee voted 40-3 in mid-January in favor of sending the bill to the floor.

Senate Majority Leader Chuck Schumer announced his support for the tax bill and plans to determine the timeline and procedure for its floor vote in consultation with Wyden, the chairman of the Senate’s tax-writing committee. Wyden hopes for the bill to receive a vote as quickly as possible.

Rachel Adams

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