Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

House passes bipartisan tax bill, but election-year politics complicate its path

Pennsylvania Gov. Josh Shapiro, back left, talks with Quinn Howard, who has a child in day care at the YWCA in York, Pa.  (Tom Gralish)
By Kayla Guo New York Times

WASHINGTON – The House gave broad bipartisan approval Wednesday to a $78 billion bill that would expand the child tax credit and restore a set of corporate tax breaks, a rare feat in an election year by a Congress that has labored to legislate.

The bill passed 357-70, with mainstream lawmakers in both parties driving the House’s first major bipartisan bill of the year to passage. Forty-seven Republicans and 23 Democrats voted against the bill.

But despite the lopsided show of support, the measure faces a fraught path to enactment amid political divides over who should benefit the most. The effort, which faces resistance from Senate Republicans, is a test of whether a divided Congress with painfully thin margins can buck the dysfunction of the Republican-led House, set aside electoral politics and deliver legislation that would contain victories for both parties.

Rep. Jason Smith, R-Mo., chair of the House Ways and Means Committee, championed the legislation as “pro-growth, pro-jobs and pro-America.”

“It’s a strong, common sense, bipartisan step forward in providing urgent tax relief for working families and small businesses,” Smith added.

The package would expand the child tax credit – though a version substantially scaled back from its pandemic-era level – and restore a set of business tax breaks related to research and development, and capital expenses. Both would last through 2025. It would also bolster the low-income housing tax credit and extend tax benefits to disaster victims, and Taiwanese companies and individuals.

The plan would be financed by curbing the employee retention tax credit, a pandemic-era measure meant to encourage employers to keep workers on the payroll that has become a magnet for fraud.

Lawmakers in both parties regard it as a policy victory and a way to show voters they can actually accomplish something despite the chaos and turmoil that have come to define the Republican-led House.

“The majority of the country is really thirsty for us to do things in a bipartisan manner,” Rep. Greg Murphy, R-N.C., said in an interview. “We’ve seen a lot of gridlock because some people really want to, basically, say no to everything. And I think we do need to move forward and actually show people that we can govern.”

In a sign of the political hurdles that are complicating the bill’s path, House Speaker Mike Johnson brought it to the floor Wednesday under special expedited procedures that required a two-thirds majority for passage. The maneuver allowed him to steer around Republicans who could otherwise have blocked the bill over their policy and political objections.

Senate Republicans have also sought to pump the brakes, in another indication of the political challenges the package still faces. The bill would be a win for President Joe Biden and Democrats, who have made expanding the child tax credit a signature issue, including Sen. Sherrod Brown of Ohio, who is up for reelection this year and is a key target for Republicans in November.

Sen. Michael D. Crapo of Idaho, the top Republican on the Finance Committee, said Wednesday that he still had concerns with the bill – including a provision that would allow parents to use their previous year’s earnings to claim a bigger credit, which he argued would discourage work – and wanted to see it amended in the Senate. Crapo, and many other Senate Republicans, previously voted in favor of the same provision in previous bills.

“I’m sure there are going to be a number of issues, like raised yesterday in the House, that didn’t get resolved,” Crapo said. “I’m guessing that a lot of those kinds of issues will come up, and we’ll have to work through them.”

A group of lawmakers from New York and other blue states with high tax rates was angry that the measure omitted an increase it had sought to the cap on state and local tax deductions, known as SALT, which would benefit high earners. New York Republicans signaled their ire Tuesday by briefly blocking a procedural measure in protest.

“The point, as has been made multiple times in this Congress, is obviously that there are strength in numbers,” said Rep. Mike Lawler, who joined Reps. Anthony D’Esposito, Nick LaLota and Andrew Garbarino in defecting on the measure, only to switch their votes once their point had been made. “But for us that delivered the majority, this is the issue that matters.”

Johnson assuaged their concerns after a long night of meetings Tuesday by committing to working with them to find a way to address SALT, said Athina Lawson, a spokesperson for the speaker’s office.

The package that the House passed Wednesday was brokered by the top two tax writers in Congress: Smith and Sen. Ron Wyden, D-Ore., chair of the Finance Committee. It has the support of the White House, key leaders in both parties on Capitol Hill and a variety of rank-and-file members. It gained momentum after the Ways and Means Committee approved it on an overwhelmingly bipartisan basis in January.

Proponents point to that vote, and to how unlikely it had seemed for a tax deal to come together, as a good sign for its prospects.

“Most prognosticators would have told you as recently as a month ago that this bill was destined to die in negotiations or collect dust on a shelf if it ever got introduced,” Wyden said in a statement Wednesday. “Given the sorry state of our political climate, it’s a real victory to have such strong momentum behind this bill that will help 16 million American kids from low-income families get ahead.”

Republican proponents have argued that the business tax breaks are worth embracing and have framed the child tax credit as a conservative win as well.

“The child tax credit reforms in this bill are pro-family policies that maintain the child tax credit structure of the Trump-era GOP tax reform,” Smith said in a statement. “The child tax credit provisions in this bill help families crushed by inflation, remove the penalty for families with multiple children and maintains work requirements.”

The legislation would make the $2,000-per-child credit more accessible to families with multiple children and gradually raise the cap on how much lower-income families can claim to match the amount for higher-income families. It would also automatically adjust the credit for inflation and allow parents to use their previous year’s earnings if it means they could receive a larger credit.

Right-wing Republicans denounced the expansion, arguing that it would discourage work. They also objected to allowing immigrants in the country illegally who have U.S.-born children to receive the credit, for which they are eligible under current law.

“I’m not going to support something that expands the child tax credit, which is expanding the welfare state massively,” said Rep. Bob Good, R-Va., chair of the House Freedom Caucus. “And I’m not going to support child tax credit going to illegals. I think that’s incentivizing this illegal invasion, and we ought to stand united against it as the Republican Party.”

Progressive Democrats, on the other hand, argued that the bill did not expand the tax credit enough and disproportionately benefited corporations. It falls far short of the pandemic-era version of the child tax credit, which deposited up to $3,600 per child in families’ bank accounts and helped to pull millions of children out of poverty.

“I cannot vote for a deal that so lopsidedly benefits big corporations while failing to ensure a substantial tax cut to middle and working-class families,” Rep. Rosa DeLauro of Connecticut, the top Democrat on the Appropriations Committee, said on the floor before the vote. “This bill provides billions of dollars in tax relief for the wealthy and pennies for the poor.”

This article originally appeared in The New York Times.