House Passes Bipartisan Tax Bill Benefiting Parents And Corporations

WASHINGTON The House of Representatives on Wednesday approved a bipartisan bill expanding the child tax credit, as well as business deductions long sought by corporate America.

If the bill passes the Senate, millions of American families could get more money back from the IRS in the coming months. The House approved the bill with a huge bipartisan majority vote, but its not clear if the Senate will move quickly.

The bill passed the House on a 357-70 vote.

Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, said that he believes the upper chamber will hold hearings on the legislation before the full Senate can approve it.

When a bill goes to the floor in regular order, every senator can file amendments, he noted.

Sen. Chuck Grassley (R-Iowa), meanwhile, suggested that he opposed the bill because passing it makes the president look good by allowing him to mail out checks before the election, helping him get re-elected and making it harder for Republicans to have their way with tax policy going forward. 

While Democratic leaders in the Senate have endorsed the bill, Senate GOP leadership has stayed silent. Several GOP lawmakers have voiced concerns about its impact on the federal deficit, even though budget scorekeepers have said that its cost will be offset.

If the Senate changes the bill, then it would have to pass the House again before it could become law which could be a problem.

The legislation was crafted by Rep. Jason Smith (R-Mo.), the top tax writer in the Republican-led House, and Sen. Ron Wyden (D-Ore.), Smiths Senate counterpart. The two lawmakers sought parity between the family and business sides of the bill, with each costing about $30 billion. Upsetting that balance could make another vote difficult.

And House Speaker Mike Johnson (R-La.) already took a risk by putting the bill on the floor of his chamber, since members of the far-right House Freedom Caucus opposed the legislation, dubiously claiming that it overly benefits undocumented immigrants . Freedom Caucus members overthrew Johnsons predecessor in the speakers office last year after he allowed a bipartisan vote on a government funding bill, and theyve threatened to throw out Johnson too. 

Wyden told HuffPost earlier on Wednesday that if the House passed the bill by a wide bipartisan margin, Senate Republicans would feel pressure to let it through the upper chamber.

If theres a big vote tonight for the bill, I think a lot of the traditional D and R rituals arent quite so powerful anymore, because people will say: I need the money. I need to go out and buy my kid diapers. I need to get him school shoes. In our household were walking an economic tightrope, and our small businesses can say the same thing, Wyden said.

If the tax package does become law, low-income parents stand to receive larger tax refunds in the months ahead, especially in households with multiple children. Congressional tax analysts said that a tax filer who has two children and earned $9,000 last year would receive a child tax credit refund worth $975 under current law, but $1,950 under the proposal.

Tax season opened this week, but the IRS would likely be able to catch up to a change in law in time to deliver the larger refunds, tax experts told HuffPost. 

The bill would not cost the government money, according to budget scorekeepers, because it would raise about $78.6 billion through 2033 by cracking down on abuse of the employee retention tax credit, or ERTC a program from the early days of the COVID-19 pandemic that encouraged business owners to keep workers on company payrolls.

Suspected fraud in ERTC claims was so rampant that in September 2023 the IRS said it would stop processing new claims. And a month later it announced a process for business owners to withdraw claims that they had already made, and avoid getting an undeserved credit that they would later have to repay with penalties.

The money from the crackdown would go to pay for the child tax credit and business breaks. The child tax credit, as well as the business breaks for research and development expenses and for writing off the value of old equipment, would generally be available through the 2025 tax year under the bill.