Law 2025 Tax Reform: CTC/Business Tax Gap Extension likely to die in Senate

[Lead]

Updated Post 4/15/24
The early bill before a 2025 showdown looks to be dead in the the Senate. Enough high ranking Republicans like Tillis and Cornyn (senators on the top list for succeeding McConnell as senate GOP leader) not interested in it's passage. The bill ultimately was filling in the gap before 2025 so everything would still be expiring again but at that same time.

'On life support': Senate Republicans are prepared to sink the child tax credit bill​

NBC

Senate Republicans are inching closer to burying a bipartisan bill to expand the child tax credit and provide breaks for businesses, issuing a series of demands that would most likely disrupt the coalition that enabled it to pass the House.

The $78 billion bill, negotiated by House Ways and Means Committee Chair Jason Smith, R-Mo., and Senate Finance Committee Chair Ron Wyden, D-Ore., passed the Republican-led House by a vote of 357-70 in January, a rare feat in a divided Congress that has struggled to function. But it has languished in the Senate, where key Republicans have said they’ll kill it unless it includes major revisions. Senate Democrats have 51 seats, and they need 60 votes to break a filibuster.


But with tax filing season close to finishing and election-year politics heating up, there’s no hint of a resolution in sight. Democratic leaders are eager to pass the legislation, which, according to one analysis, would benefit about 16 million children in low-income households. Some Republicans openly warn they may sink it.

Sen. Thom Tillis, R-N.C., a member of the Finance Committee, said he’d be happy to see the entire tax bill fade away.

“I hope so,” Tillis said, adding that it doesn’t have the necessary 60 votes to pass in the Senate today.

The Senate Should Reject the Wyden-Smith Tax Bill​

WSJ OpEd by Senator Tillis

If you listen to House Ways and Means Committee Chairman Jason Smith, you would think that House Republicans secured a monumental tax deal that advances conservative priorities, justifying his public call for the Senate to pass it quickly.

As always, the devil is in the details. Senate Republicans have been doing their homework to find out what is actually in Mr. Smith and Sen. Ron Wyden’s Tax Relief for American Families and Workers Act of 2024 and what implications it would have on future tax policy. Upon further inspection, it’s hard to avoid the impression that House Republicans got played by Senate Democrats doing the bidding of the Biden administration.

The fundamental problem with the bill is that Republicans made a major concession to Democrats—allowing the child tax credit to begin to transition into a de facto welfare program—in return for something Democrats already wanted: research-and-development tax breaks for businesses.
President Biden and Democratic lawmakers have been keen to weaken the work requirements of the child tax credit as part of their “Build Back Better” agenda. They love to use the term “refundability,” which means ensuring that people get money from the government even if they don’t pay taxes.

I find this one a bit odd in the sense you don't usually see a largely bipartisan bill originate in the House and then die in the Senate like this. Normally the other way around.


Updated Post 2/1/24
Passed House vote in what looks to have been 2/3 majority to avoid a bunch of procedural hoops. Odd vote as a minority of GOP and Dems were in the no block

House approves major bipartisan tax bill to expand child tax credit, business breaks​

CBS

The House voted on Wednesday to approve a bill that would expand the child tax credit and extend some business tax credits in a rare and long-sought bipartisan victory amid divided government.

The legislation passed the House in a 357 to 70 vote, far surpassing the two-thirds majority it required. 188 Democrats joined 169 Republicans in voting to approve the bill, while 23 Democrats and 47 Republicans voted against it. The measure now heads to the Senate.

Updated Post 1/19/24
The bill passed the House Ways and Means committee 40-3

House panel advances tax deal with resounding bipartisan vote​

A deal to reduce taxes for businesses and increase the child tax credit (CTC) made it out of the House Ways and Means Committee with broad bipartisan support Friday.

The tax deal advanced with 40 votes in favor and only three opposed.

Posted 1/18/24
So it looks like some of this might get addressed during election season rather than kicked down the road to 2025 (sort of). Child Tax Credit expansion from 1,600 to 2,000 along with business tax cuts allowing for accelerated depreciation on R&D and capital expenditure for 2023-2025. The offset revenues would come from an employee retention tax credit that was around for COVID and needs phased out. I don't have the summarized totals if it is budget neutral. The thing with this is having it expire in 2025 aligns these items with the other TCJA expirations so 2025 will still be pivotal in Congress after the election

Congress announces major tax deal to expand child tax credit and revive breaks for businesses​

NBC

Senior lawmakers in Congress announced a bipartisan deal Tuesday to expand the child tax credit and provide a series of tax breaks for businesses.

The $78 billion tax agreement between House Ways and Means Chair Jason Smith, R-Mo., and Senate Finance Chair Ron Wyden, D-Ore., caps months of negotiating and pursuing common ground in the divided Congress.


It still needs to be written into legislation and secure the votes to pass the Republican-led House and the Democratic-led Senate, which is not guaranteed. But the top tax writers are hopeful it can pass quickly, before people file their taxes this year.

“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs,” Smith said in a statement.

The deal, details of which were reported earlier by NBC News, would enhance refundable child tax credits in an attempt to provide relief to families that are struggling financially and those with multiple children. It would also lift the tax credit's $1,600 refundable cap and adjust it for inflation.

The Bill

Five Things to Know About the Bipartisan Tax Deal from the Bipartisan Policy Center​

The new Child Tax Credit deal is really a safety net deal—and by that measure it is only a start from Brookings Institution​

Bipartisan CTC Framework Would Help Lowest Income Quintiles from the Tax Policy Center​

This bill looks to have low chance of passing from what some lawmakers think. Unlikely to see a vote in the House if I had to guess but worth keeping an eye on. Its clear what the bargaining chips are as mentioned back in December.

 

[Lead]

Original Post
Using this as the new chapter of from the CTC and BBB/IRA threads as they shared similar implications to new government spending and tax policy decisions.

Background:
The last tax overhaul was TCJA during Trump's administration. However, many of these cuts are set to expire in 2025 which likely is going to lead to a strong push for new legislation to pass. It's unlikely we will see anything 23-24 with the presidential election ramping up and a divided Congress/ White House. However, even with that in the next presidential term, there will be pressure to still have this addressed.
On top of that, we had some temporary tax expansions with Democrats expanding the CTC for a year. Though there was a push to continue this with BBB, it ultimately didn't make it through but is something still being eyed to get back.

What's Set to Expire?
Individual income tax rates will revert to their 2017 levels
The standard deduction will be cut roughly in half, the personal exemption will return while the child tax credit (CTC) will be cut
The estate tax exemption will be reduced.
The 20 percent tax deduction for many pass-through businesses will disappear.
The cap on the state and local income Tax (SALT) deduction will dissolve.
The mortgage interest deduction will expire.


Democrats could see much of this favorably. Many of these provisions they weren't favor of simply will go away without any action needed. However, there's at least two items some to all of the party might want to extend. CTC obliviously being the first as they wanted to expand back to 3k and this expiration brings from 2k down to 1k. Additionally, they'd want to to get the full credit to be refundable so it would impact lower income or no income recipients further. The second items is the state and local income tax (SALT) deduction which is somewhat of a fault line within the party. Some of the more progressive legislators are okay with the deduction disappearing as this benefits mostly high earners in high taxation states. However, some Democrat legislators from high taxed states including Schumer do have an interest in keeping it in place. Keep in mind TCJA already impacted SALT and this is the final phase out in 2025. Outside of the expirations, there many other things you could see Democrats exploring like a wealth tax, raising corporate tax rates, etc to fund these extensions and/ or expansions.

With this being TCJA, Republicans would push for more of these to continue on aside from maybe SALT. On top of all this, there will be another budget cliff in 2025 so if the past cliffs trends continue, there will be calls for spending cuts in raising the ceiling which hasn't been all that successful as a tactic. These expirations will apply more leverage and pressure for each camp to get something passed.


Resources:
Buckle Up. 2025 Promises To Be An Historic Year In Tax And Budget Policy from Tax Policy Center
The coming fiscal cliff: A blueprint for tax reform in 2025 from The Brookings Institute
Tax Reform Isn’t Done from The Tax Foundation

 

[Lead]

Reserved

 

[Lead]

Reserved

 

[Lead]

Reserved

 

[Bunk Moreland]

Mo money mo problems.

 

[Lead]

There might be some dealmaking before the cliff. Some of congress are in talks for a agreement that gives both business tax cuts and a smaller but similar child tax credit expansion.

Congress eyes last-minute child tax credit deal​

Axios​

Members of the House and Senate are engaged in advanced, last-minute negotiations to reach a tax deal in December or January that includes key priorities for both parties, according to lawmakers and aides.

Why it matters: Heading into the 2024 election, Democrats want to resurrect a version of the child tax credit, which expired last year, to lower childhood poverty and give their vulnerable members a tangible policy win.

• Republicans are eager to prove to the business community that the House GOP majority can deliver for them by reinstating the full deductibility of research and development investments that expired at the end of 2022.
• Any compromise between the key tax writing committees would have to be prioritized by House and Senate leaders. At an estimated $100 billion, it would also be expensive.

I don’t see any details for revenue offsets. Could we see bipartisan deficit spending during good economic times? If so, I wonder how concerning 2025 really is to Washington or if the thing front of mind is election season. I thought we wouldn’t see any legislative movement a year out from a presidential election but might not matter.

 

[Lead]

So it looks like some of this might get addressed during election season rather than kicked down the road to 2025 (sort of). Child Tax Credit expansion from 1,600 to 2,000 along with business tax cuts allowing for accelerated depreciation on R&D and capital expenditure for 2023-2025. The offset revenues would come from an employee retention tax credit that was around for COVID and needs phased out. I don't have the summarized totals if it is budget neutral. The thing with this is having it expire in 2025 aligns these items with the other TCJA expirations so 2025 will still be pivotal in Congress after the election

Congress announces major tax deal to expand child tax credit and revive breaks for businesses​

NBC

Senior lawmakers in Congress announced a bipartisan deal Tuesday to expand the child tax credit and provide a series of tax breaks for businesses.

The $78 billion tax agreement between House Ways and Means Chair Jason Smith, R-Mo., and Senate Finance Chair Ron Wyden, D-Ore., caps months of negotiating and pursuing common ground in the divided Congress.


It still needs to be written into legislation and secure the votes to pass the Republican-led House and the Democratic-led Senate, which is not guaranteed. But the top tax writers are hopeful it can pass quickly, before people file their taxes this year.

“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs,” Smith said in a statement.

The deal, details of which were reported earlier by NBC News, would enhance refundable child tax credits in an attempt to provide relief to families that are struggling financially and those with multiple children. It would also lift the tax credit's $1,600 refundable cap and adjust it for inflation.

The Bill

Five Things to Know About the Bipartisan Tax Deal from the Bipartisan Policy Center​

The new Child Tax Credit deal is really a safety net deal—and by that measure it is only a start from Brookings Institution​

Bipartisan CTC Framework Would Help Lowest Income Quintiles from the Tax Policy Center​

This bill looks to have low chance of passing from what some lawmakers think. Unlikely to see a vote in the House if I had to guess but worth keeping an eye on. Its clear what the bargaining chips are as mentioned back in December.

 

[Lead]

The bill passed the House Ways and Means committee 40-3

House panel advances tax deal with resounding bipartisan vote​

A deal to reduce taxes for businesses and increase the child tax credit (CTC) made it out of the House Ways and Means Committee with broad bipartisan support Friday.

The tax deal advanced with 40 votes in favor and only three opposed.

Also, it does appear to be a budget neutral bill. The tax credit offset should fund the CTC and business tax cuts up to 2025

 

[sickc0d3r]

The bill passed the House Ways and Means committee 40-3

House panel advances tax deal with resounding bipartisan vote​

Seems positive. Why does it need 60 votes to pass in the Senate, if it gets there?

 

[Lead]

Seems positive. Why does it need 60 votes to pass in the Senate, if it gets there?

I suppose if Dems wanted to do reconciliation, they could do 50 but I think the point would be it won’t pass the house if they couldn’t get 10 GOP senators for a senate vote. Reconciliation is a long process too and I don’t know if Schumer would want to go that route knowing they don’t control the House. We still don’t even know if Johnson would bring it to the floor even without that scenario.

 

[Lead]

Johnson has given the bill the green light and expects it to pass in the House. This might pass with little news since the border deal is taking up a lot of the headlines.

House Speaker Mike Johnson said he intends to put a bipartisan tax package on the floor for a vote that would need a two-thirds majority to pass — moving business breaks and an expansion of the Child Tax Credit one significant step toward passage in the House.

Johnson says he intends to put a bipartisan tax package on the House floor​

House Speaker Mike Johnson said he intends to put a bipartisan tax package on the floor for a vote that would need a two-thirds majority to pass — moving business breaks and an expansion of the Child Tax Credit one significant step toward passage in the House.

“There’s a few subsets of members you have concerns for various reasons, but we’re gonna probably run it on suspension,” said Johnson of the impending vote at a Congressional Institute event Monday evening. “And I think you’re gonna get a very high vote tally, probably on both sides of the aisle. There’s a lot of great policy in there.”

 

[Deorum]

Hurry The Fuck Up.

 

[Andy Capp]

The bill passed the House Ways and Means committee 40-3

House panel advances tax deal with resounding bipartisan vote​

Posted 1/18/24
So it looks like some of this might get addressed during election season rather than kicked down the road to 2025 (sort of). Child Tax Credit expansion from 1,600 to 2,000 along with business tax cuts allowing for accelerated depreciation on R&D and capital expenditure for 2023-2025. The offset revenues would come from an employee retention tax credit that was around for COVID and needs phased out. I don't have the summarized totals if it is budget neutral. The thing with this is having it expire in 2025 aligns these items with the other TCJA expirations so 2025 will still be pivotal in Congress after the election

Congress announces major tax deal to expand child tax credit and revive breaks for businesses​

NBC


The Bill

Five Things to Know About the Bipartisan Tax Deal from the Bipartisan Policy Center​

The new Child Tax Credit deal is really a safety net deal—and by that measure it is only a start from Brookings Institution​

Bipartisan CTC Framework Would Help Lowest Income Quintiles from the Tax Policy Center​

This bill looks to have low chance of passing from what some lawmakers think. Unlikely to see a vote in the House if I had to guess but worth keeping an eye on. Its clear what the bargaining chips are as mentioned back in December.

tl;dr but as a foreign bystander, I'm just wondering; are any of the business tax cuts tied to increases in employee compensation?

 

[boingyman]

I don't mind the extra CTC since I have 2 kids. What I'm hoping for is getting rid of the $10k SALT deduction cap or at the very least increasing it and then double it for joint filers. That 10k cap pretty much increases taxes for many upper-middle class joint-filers especially if they own a home(s) and living in a state that has state income taxes. Many people in California had to pay way more taxes since the cap because of generally higher incomes and home value. Sorry just me being salty about the SALT cap...

 

[Lead]

tl;dr but as a foreign bystander, I'm just wondering; are any of the business tax cuts tied to increases in employee compensation?

No, it allows businesses to deduct certain costs faster like R&D. It could make certain wages seem cheaper to the business but I doubt it really has that kind of impact on wages.

 

[Lead]

I don't mind the extra CTC since I have 2 kids. What I'm hoping for is getting rid of the $10k SALT deduction cap or at the very least increasing it and then double it for joint filers. That 10k cap pretty much increases taxes for many upper-middle class joint-filers especially if they own a home(s) and living in a state that has state income taxes. Many people in California had to pay way more taxes since the cap because of generally higher incomes and home value. Sorry just me being salty about the SALT cap...

That will be one piece once all the 2025 expirations show up. I would find it hard to expect the cap to increase or a deduction to remain in place at all depending who controls after election season. Dems are somewhat split the deduction and GOP is completely fine with using in bargaining since it does benefit high taxation states more. There’s just a lot that’s going to be on the line like CTC extension that I would be surprised they could also gain ground here with all the moving parts.

 

[Andy Capp]

No, it allows businesses to deduct certain costs faster like R&D. It could make certain wages seem cheaper to the business but I doubt it really has that kind of impact on wages.

Pity.

 

[boingyman]

That will be one piece once all the 2025 expirations show up. I would find it hard to expect the cap to increase or a deduction to remain in place at all depending who controls after election season. Dems are somewhat split the deduction and GOP is completely fine with using in bargaining since it does benefit high taxation states more. There’s just a lot that’s going to be on the line like CTC extension that I would be surprised they could also gain ground here with all the moving parts.

I'm not giving my hopes up, but I would even settle to double it for joint filers. That would save me another $2400 in fed taxes

 

[Lead]

Passed House vote in what looks to have been 2/3 majority to avoid a bunch of procedural hoops. Odd vote as a minority of GOP and Dems were in the no block

House approves major bipartisan tax bill to expand child tax credit, business breaks​

CBS

The House voted on Wednesday to approve a bill that would expand the child tax credit and extend some business tax credits in a rare and long-sought bipartisan victory amid divided government.

The legislation passed the House in a 357 to 70 vote, far surpassing the two-thirds majority it required. 188 Democrats joined 169 Republicans in voting to approve the bill, while 23 Democrats and 47 Republicans voted against it. The measure now heads to the Senate.