On Wednesday, the House achieved something noteworthy by approving a roughly $79 billion tax cut package with broad bipartisan backing.
This package aims to improve the child tax credit for many lower-income families and provide three tax breaks for businesses.
This combination is seen as a significant success for lawmakers from both political parties.
While the chances of the measure becoming law are uncertain, as the Senate still needs to review it, the tax legislation marks a rare breakthrough for a House that has struggled to pass impactful bills.
The bill was successfully passed with a vote of 357-70.
Speaker Mike Johnson, a Republican from Louisiana, expressed his support for the bill on Wednesday morning.
He addressed concerns raised by GOP lawmakers, particularly regarding the expanded child tax credit, during discussions held the previous day.
House Republicans were eager to reinstate complete and immediate deductions for businesses, applicable to the acquisition of new equipment and machinery, as well as for domestic research and development expenses.
Their rationale is grounded in the belief that such investments contribute to economic growth and encourage American companies to maintain their manufacturing facilities and operations within the United States.
Additionally, the proposed bill affords businesses increased flexibility in determining the deductible amount for borrowing.
Democrats Push $2,000 Child Tax Credit Boost
Democrats have concentrated their efforts on enhancing the child tax credit, which currently stands at $2,000 per child, with a portion of it not being refundable.
The proposed bill seeks a gradual increase in the refundable portion, reaching $1,800 for the 2023 tax returns, $1,900 for the subsequent year, and $2,000 for the 2025 tax returns.
Additionally, the bill temporarily adjusts the top-line credit amount to grow in accordance with inflation.
Estimates from the nonpartisan Tax Policy Center suggest that households benefiting from the changes in the child tax credit would experience an average tax cut of $680 in the initial year.
Democrats have advocated for a restoration of the more generous tax credit enacted in 2021 during President Joe Biden’s first year, which involved monthly payments of $3,600 for children under age 6 and $3,000 for those aged 6 to 17.
However, faced with the realities of the compromise bill, most lawmakers were willing to accept incremental gains.
