Supporters of a bipartisan tax deal passed by the House in January are growing increasingly frustrated as the measure encounters resistance in the Senate, primarily due to Republican opposition to its expansion of a credit for working families.
The Tax Relief for American Families and Workers Act pairs an expansion of the child tax credit (CTC), which proved effective in lifting millions of children out of poverty during the pandemic, with reinstated business tax breaks that were rescinded to help fund the 2017 Trump tax cuts.
These business credits, including those for research and development costs, depreciation schedules, and tax-deductible interest payments, enjoy bipartisan support. However, the cancellation of the employee retention credit, aimed at curbing fraudulent claims, has become a point of contention.
House Members (Credits: Britannica)
While the deal’s business credits have bipartisan backing, Republicans are hesitant to proceed with a bipartisan agreement ahead of the November elections.
They foresee a potential GOP sweep empowering Republicans to enact further tax legislation, possibly extending the Trump-era tax cuts set to expire in 2025.
Senate negotiations on the bill remain deadlocked, with accusations from both sides about the other’s approach. Senate Finance Committee Chair Ron Wyden has appealed to Republican senators, emphasizing concessions made to address their concerns, but negotiations remain stalled.
The proposal, though important in its scope, is viewed as modest compared to expected tax legislation next year, particularly concerning the expiration of Trump-era provisions.
Senate (Credits: Reuters)
The outcome of negotiations post-2024 elections could overshadow the current tax deal, given the substantial impact of the Trump tax cuts on the federal deficit.
While Democratic enthusiasm for the bill remains strong, Republican support remains elusive. Some Republicans are waiting for further modifications, while others are actively opposed, citing concerns about the bill’s provisions and its timing relative to larger fiscal challenges next year.
Despite bipartisan support in the House and backing from big business, the fate of the tax deal in the Senate remains uncertain. Advocates are pressing for action, recognizing the narrowing window of opportunity to pass the legislation.
