House panel advances tax deal with resounding bipartisan vote on January 19, 2024 at 8:21 pm Business News | The Hill

A deal to reduce taxes for businesses and increase the child tax credit (CTC) made it out of the House Ways and Means Committee with broad bipartisan support Friday.

The tax deal advanced with 40 votes in favor and only 3 opposed.

A last-minute substitution amendment to the $79 billion tax bill tweaked it slightly, bringing its total savings to $399 million from $262 million over the 10-year budget window, according to the Joint Committee on Taxation (JCT).

The cost of the proposal — $33 billion for the CTC expansion plus another $33 billion for business breaks — are offset almost exactly by a $77 billion revenue bump achieved by canceling the employee retention tax credit (ERC).

During the Friday markup of the bill, Democrats expressed frustration that it didn’t include a larger allotment for the expanded child tax credit, which raised millions of children out of poverty when it was boosted and made fully refundable in the wake of the pandemic.

Amendments to further boost the CTC by making it fully refundable and sending it out in monthly payments were proposed by Democrats but shot down by the committee.

“The child tax credit, or CTC policy, as written in this bill does not reach families who need it the most,” Rep. Suzan Delbene (D-Wash.), who proposed one of the amendments, said during the hearing. “Someone making the federal minimum wage and working full time, [making] approximately $15,000 a year, would not earn enough to receive the full credit.”

Still, key Democrats including ranking member Richard Neal (D-Mass.) and Bill Pascrell (D-N.J.) voted in favor of the plan. Only Reps. Lloyd Doggett (D-Texas), Linda Sanchez (D-Calif.) and Brian Higgins (D-N.Y.) voted against it.

While the bill is revenue-neutral and provides $33 billion in deductions for research costs and other business expenses, Republicans have boasted much larger benefits will accrue to companies as a result of the deal.

​​“This legislation locks in over $600 billion in proven pro-growth, pro-America tax policies with key provisions that support over 21 million jobs,” Ways and Means chair Jason Smith (R-Mo.) said in a statement released along with the announcement of the deal earlier this week.

Some analysts say this is why the nominal parity in the legislation between the business credits and CTC expansion is not really accurate.

Joe Hughes, a federal policy expert with the Institute on Taxation and Economic Policy, told The Hill the $600 billion figure comes from the possibility that Republicans will work to extend them beyond 2025, when they’re currently set to expire.

“This highlights one of the complications CTC advocates have faced while negotiating on a dollar-for-dollar agreement. Two of the business provisions have to do with the timing tax payments, so when they are only extended temporarily, the revenue score understates their true cost by assuming the government will make up some of the revenue loss in the out-years. Of course, proponents of these provisions never intend for them to truly expire,” he wrote in an analysis.

The White House said Friday it was pleased on the progress of the legislation — and the fact that the deal was paid for — urging Congress to pass the measure.

“We are pleased that the House Ways and Means Committee has advanced a bipartisan tax bill that will increase the Child Tax Credit for millions of families,” a White House spokesperson told The Hill in a statement.

“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 spokesperson added.

The deal faces an uncertain future in the GOP-controlled House, where Speaker Mike Johnson (R-La.) has yet to weigh in on the measure. Johnson is also facing pressure from conservative hardliners over government funding and border security ahead of a potential shutdown on March 1, which could complicate the bill’s path out of the House.

Senate Majority Leader Chuck Schumer (D-N.Y.) has endorsed the tax proposal, which would need 60 votes to pass the upper chamber.

​Business, Domestic Taxes A deal to reduce taxes for businesses and increase the child tax credit (CTC) made it out of the House Ways and Means Committee with broad bipartisan support Friday. The tax deal advanced with 40 votes in favor and only 3 opposed. A last-minute substitution amendment to the $79 billion tax bill tweaked it slightly,…