alt=Brigham TomcoAn effort to expand child tax credits overcame the partisan paralysis of Congress in January before it came to a halt at the feet of Idaho Republican Sen. Mike Crapo where it seems likely to die.
Crapo — the top Republican on the Senate Finance Committee — helped craft the bill with committee chair Ron Wyden, D-Ore. However, the inclusion of provisions that allow out-of-work parents to cash in on the credit turned a “thoughtful starting point” into a dead-end for Crapo, with most Senate Republicans following his lead.
The next several days are seen as the final, and closing, window for the tax package to pass before tax season ends and the Senate’s attention is turned toward national security measures, foreign aid and election season.
House passes an expanded child tax credit
Just after the new year, the $78 billion Tax Relief for American Families and Workers Act passed the House with the kind of bipartisan margins rarely seen in Congress today, with a 357-70 vote in favor of the bill. Utah’s Republican delegation, Reps. Blake Moore, Celeste Maloy, John Curtis and Burgess Owens, all voted for the measure.
Building on the Tax Cuts and Jobs Act Donald Trump signed into law in 2017, the bill would temporarily increase the child tax credit, which is refundable for low-income families, multiplying it on a per-child basis, and adjust the credit amount for inflation by $100 in 2024 and 2025 when it is set to expire.
The bill would also reinstate a policy that allows companies to immediately claim tax deductions for research and development costs, and would increase the Low-Income Housing Tax Credit for state agencies tasked with building affordable homes.
But the bill has stalled in the Senate where Minority Leader Mitch McConnel, R-Ky., has deferred to Crapo on whether the chamber’s 49 Republicans will join Democrats to bring it to the floor for a vote. Crapo, a Brigham Young University graduate, is one of the highest-ranking Republicans in the Senate.
In a statement issued at the end of February, Crapo said his central criticism of the package was a provision that allowed families to use their prior-year income to calculate benefits for 2023, 2024 and 2025. This would allow unemployed parents to be eligible for child tax credits, undermining work requirements and transforming the credit “from primarily working family tax relief into a government subsidy,” Crapo said.
Wyden offered to remove the provision last month but Crapo was still unsatisfied with the deal, Punchbowl News reported, as he remained concerned about the increased refundability for those who don’t pay federal income taxes — which has been the main selling point for Democrats.
Sen. Mitt Romney opposes House child tax credit expansion
Utah Sen. Mitt Romney has also come out in opposition to the bill. Romney has spearheaded conversations around child tax credit expansion on the Republican side of the aisle. But unlike his own child allowance plan, The Family Security Act 2.0, Wyden’s child tax credit would not be paid for, Romney said.
“Once it gets put in place, it’s going to end up being another hugely expensive entitlement program, which simply doesn’t make sense,” Romney said in February.
The bill’s sponsors have said its cost would be offset by ending a fraud-ridden employee retention program from COVID-19. But Romney said the program should just be cut by itself and doesn’t represent a real offset, and that any argument to the contrary is “phony baloney.”
The Tax Relief for American Families and Workers Act is expected to decrease government revenues and end up costing around $400 million over 10 years, according to the Joint Committee on Taxation.
Punchbowl News reported on Tuesday one last-ditch effort to get the tax deal through the Senate.
In March, Sen. Josh Hawley, R-Missouri, saw his Radiation Exposure Compensation Act pass 69-30 in the Senate. The bill, which would reauthorize a compensation program for nuclear radiation victims, was co-sponsored by Crapo. And Hawley has said he’s willing to tie its fate to the tax deal Crapo has put on hold.
“The tax bill is on life support in the Senate,” Hawley said in a statement to the Deseret News. “At this point, adding RECA to the tax bill looks to be the only way to get the tax bill passed. I know it will get my vote.”
Romney supported an extension of the government’s radiation exposure compensation program to affected Utah residents. However, he voted against Hawley’s iteration because it expanded eligibility to cover regions and illnesses “without clear evidence” linking them to “previous government action.”
Hawley must show that enough Senate Republicans are willing to go against their party’s top authority on tax policy before Majority leader Senate Majority Leader Chuck Schumer would combine the two measures, Punchbowl News reported.