Tax writers in the House and Senate are gearing up for negotiations over tax reform as congressional lawmakers introduce their first proposals for a package that will garner widespread support from both sides of the aisle.
Senate Democrats have hedged their bids on making some form of the COVID-19 pandemic-era child tax credit permanent, while House Republicans are proposing comprehensive legislation that includes an estimated $240 billion in tax cuts for big and small businesses and individual Americans.
For six months during the pandemic, the federal government gave parents up to $300 a month per child as part of President Joe Biden's sweeping American Rescue Plan Act. Since the tax benefit lapsed in 2021, Democrats have made multiple attempts to revive the payments, citing data that shows the money reached more than 36 million U.S. households and was estimated to cut child poverty by as much as 30 percent.
Knowing that the child tax credit is a top issue for Democrats, GOP Representative Don Bacon of Nebraska told Punchbowl News: "This may be a bargaining chip that we can use" in reaching a deal on tax reform.
"The child tax credit, as we saw for those six months, was the most significant domestic policy achievement with respect to poverty that we've had here in generations, and if we can reenact it, it would be again," Democratic Senator Michael Bennet of Colorado told the New Republic last week.
Growing interest in reimplementing some form of child tax credit could further incentivize congressional Republicans to use the policy as a way to negotiate with Democrats. A number of states, including California, Colorado, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York and Vermont, have passed their own programs offering similar credits for families.
Even Republicans, like Governor Greg Gianforte of Montana, have introduced efforts to provide this type of relief for parents.
Some congressional Republicans are already beginning to warm to the idea of cutting a tax deal with the family benefit. Senator J.D. Vance of Ohio told Punchbowl that it's "one of the few issues of tax policy where you have some bipartisan agreement," and Senator Todd Young of Indiana said there would be some GOP interest in a child tax credit "if it's properly constructed and properly sized" in a tax package.
That might take significantly whittling down the $300 monthly payments offered in 2021. If the COVID-era version of the child tax credit were to be permanently extended, it could cost the government $105 billion a year, according to the Congressional Budget Office.
However, the White House has insisted on restoring some form of the expansion and criticized the proposal from the House Ways and Means Committee for not including a child tax credit provision.
"The President believes that any bill that cuts taxes for large corporations must also cut taxes for working people and families with children," National Economic Council Director Lael Brainard wrote in a June 12 memo.
Newsweek reached out to House Ways and Means Committee Chairman Jason Smith of Missouri for comment.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Katherine Fung is a Newsweek reporter based in New York City. Her focus is reporting on U.S. and world politics. ... Read more
