Tax Bill Heads to Senate
On Wednesday, January 31st, the House passed the Tax Relief for American Families and Workers Act in a bipartisan 357-70 vote. The $78 billion bipartisan bill marks a significant success for House Ways and Means Committee Chair Jason Smith (R-MO) and also for Democrats with the inclusion of the child tax credit (CTC). The House bill includes a scaled-back version of the pandemic-era child tax credit. It restores a set of business tax breaks related to research and development and capital expenses. The bill will also bolster the low-income housing tax credit and extend benefits to victims of disasters and Taiwanese companies. These provisions will last through 2025, leaving the next Congress to deal with many of these long-fought issues that need to be put up for debate in the Senate. For a full recap of the Tax Relief for American Families and Workers Act, see the Constitution Partners read out here.
Senate Schedule and Timeline
The bill now makes its way to the Senate, which poses its own set of challenges with their busy schedule. In addition to now passing the Tax Relief for American Families and Workers Act, the Senate is also in the middle of trying to craft a supplemental bill to send aid to Israel, Ukraine, and Taiwan. This has been a priority for the Senate since December, but there has been little traction. Other priorities are the new government shutdown dates, March 1st and 8th, which are rapidly approaching. A separate notable expiration is the FAA reauthorization, which is set to expire on March 8th. However, the biggest roadblock for the Senate will be if the House impeaches Homeland Security Secretary Alejandro Mayorkas, which will require the Senate to hold an impeachment trial and will take top priority. Each of these leaves the Senate on a tight timeline, especially before it adjourns for its two-week Presidents’ Day recess.
Senate Republicans have not expressed a strong desire to expedite the passage of this bill. Sen. Mike Crapo (R-ID) said in a statement, “I look forward to working with my colleagues to vet the legislation, address concerns, and make the necessary changes to build support,” and others have proposed a markup in the Senate Finance Committee, which could slow down or halt any progress on the bill altogether.
Support and Opposition
Several members on both sides of the aisle were opposed to the legislation. Progressives lamented the child tax credit expansion being too small, something they have consistently tried to expand. Conservatives opposed language allowing undocumented immigrants with children born in the US to receive the tax credit. Some Senate Republicans have criticized the bill for being too lenient on large companies that rely on debt financing to function, such as Anheuser-Busch, Apple, and Ford. The outspoken opposition from Republicans has presented a notable clash with Speaker Mike Johnson (R-LA) who, who praised the tax bill as a bipartisan win that is set to revive pro-growth tax reform.Senate Minority Leader Mitch McConnell has not yet issued a statement on the bill and has not given any indication about what the timeline for a markup would be.
The White House has been a strong supporter of the legislation, and although Democrats are pleased the CTC is included in the package, they are disappointed it is much smaller than its original pandemic-era extension. Additionally, the Joint Committee on Taxation released a statement saying the bill would not add much to the deficit, which prompted some pushback from Republican lawmakers.
Conversations among Republicans have not been overwhelmingly positive, and with an already busy legislative calendar in the Senate, it is unclear how this tax bill will fare in the coming weeks.