Bill with child tax credit gets boost amid concerns from CT Democrat

A bipartisan bill with tax breaks for businesses and families got a boost of momentum as negotiators seek to build the support needed for it to clear Congress. But it still faces challenges and skepticism, particularly from Democrats like U.S. Rep. Rosa DeLauro, D-3rd District, who want help for children prioritized more in the legislation.

On Friday, the tax-writing House Ways and Means Committee considered and voted on “The Tax Relief for American Families and Workers Act of 2024,” legislation that was released by U.S. Sen. Ron Wyden, D-Ore., and U.S. Rep. Jason Smith, R-Mo., last week.

Every Democrat who serves on the committee argued that the federal child tax credit should be fully expanded and restored to the version that significantly reduced child poverty for millions of kids in 2021.

While they said the legislation before them does not go far enough on the tax credit, many of the Democratic lawmakers still appeared open to it. And by the end of the hours-long markup hearing last week, the committee was nearly unified in getting behind the legislation. The bill cleared the committee in a 40-3 vote, which included support from U.S. Rep. John Larson, D-1st District.

It was an early win for the $78 billion tax bill that has encountered some resistance in Congress since the details were announced a week ago. The legislation will now go to the House floor, but it will still need to garner much more support from House lawmakers as well as buy-in from the Senate before going to President Joe Biden’s desk.

At Friday’s press briefing, White House press secretary Karine Jean-Pierre called Friday’s committee vote “a welcome step forward,” adding that the Biden administration believes Congress should pass it.

[RELATED: Rosa DeLauro pushes full child tax credit expansion in federal deal]

Under the proposal, families would get a small boost for the next three tax years, though the child tax credit would not see the same enhancement that was enacted in 2021 under the American Rescue Plan and expired by the end of that year.

The legislation seeks to provide more help to families with lower incomes and multiple children, though those who make less than $2,500 a year will not be eligible. The highest earners would likely not see much of a difference in what they already receive.

The bill would raise the refundable portion of the credit from $1,600 to $1,800, increasing by $100 for two years until the 2025 tax year, as well as adjust it based on the rate of inflation. It would also allow low-income families to receive more for each child, instead of getting the same amount as someone with one child. And if families do not currently earn enough to qualify, they could use the prior year’s earnings to get the credit.

An analysis from the Center on Budget and Policy Priorities said it would likely lift about 400,000 children out of poverty and give a boost to another 3 million kids in the first year of its enactment. The organization found it would help 80% of the 19 million children who either get a partial tax credit or do not qualify for one at all because they earn too little.

The current federal tax credit is back to $2,000 per child under age 17, though it is no longer fully refundable or given out as monthly payments. And the full credit is not available for some families because they make too little and do not owe income tax. The people not receiving the entire benefit are disproportionately families of color.

Aside from the child tax credit, the legislation would restore a few Trump-era tax deductions for businesses from 2017. One of those would allow companies to get immediate tax deductions for domestic research and development instead of deducting it over the course of five years.

Lawmakers secured a number of other priorities, including disaster relief for certain areas, an increase in tax credits for states to encourage affordable housing projects, and a tax treaty with Taiwan. They are seeking to pay for the new provisions by eliminating a pandemic-era employee retention tax credit that has been criticized for being rampant in fraud.

While most on the Ways and Means Committee ultimately got behind the bill, Democrats still voiced their reservations about the child tax credit component of it.

Larson, who is a proponent of both research and development tax credits and the child tax credit, argued that both are needed and would be beneficial to the economy.

“Here’s the rub for us on this side — I haven’t talked to a single business person, small, medium or large, who’s opposed to the child tax credit. They favor it because they see what it does,” Larson said.

“We need that in order to compete globally. That will attract more business and more job creation, but so will the child tax credit,” he added. “And so from the perspective of many of us on this side, this is not a big ask, in terms of what it means for your fellow Americans, and that’s why we will continue to push for that, because it’s appropriate.”

Republicans on the committee sounded more upbeat about the proposal, with many adding that they would like to see some of these tax credits for businesses made permanent and not extended for only a few years.

But roadblocks to the legislation remain.

DeLauro, who has been an advocate for the federal child tax credit for years, has been outspoken in her criticism of the tax deal.

Since the release of the bill text last week, DeLauro has doubled down on her concerns that the bill “lacks equity.” She cited an example of businesses getting the research and development tax credit retroactively to 2022, while noting that families who want to use previous annual earnings try and get a larger tax credit will not be able to take advantage of that until the 2024 tax year.

In a Monday interview, she expressed disappointment that the Ways and Means Committee approved the legislation without any changes to it that would fully enhance the child tax credit. And she pushed back on the characterization that the bill is an expansion of it.

“I’m going to continue to work to improve this legislation before it’s considered on the House floor because I believe that families and children need a strong child tax credit,” DeLauro said, saying it has “serious room for improvement.”

“I’m opposed to this bill in its current form,” she added. “Corporations get everything they asked for and children got pennies.”

Democrats passed an expansion of the child tax credit through the American Rescue Plan in 2021, but it expired at the end of that year. That enhancement increased the rebate up to $3,600 per child under age 6 and $3,000 per child age 6 to 18. In Connecticut, 583,000 children qualified for getting the payments in December 2021, according to the U.S. Treasury.

Those who qualified for the full amount were working couples who made up to $150,000 or single-parent families earning up to $112,500. The 2021 law temporarily changed it so that families got monthly installments instead of receiving it all at once when filing taxes.

As the legislation goes through consideration, DeLauro’s name has been flagged a number of times because of her long work on the child tax credit.

DeLauro said she has heard from a number of her Democratic colleagues and has already spoken with members of the Congressional Progressive Caucus. She said she is going to meet Monday with the Democratic Women’s Caucus and noted she hopes to speak with as many of her colleagues before the bill goes to the House floor for a vote.

Shortly after the tax framework was announced last Tuesday, U.S. Sen. Chris Murphy, D-Conn., said he would first need to consult DeLauro, whom he called “the mother of the child tax credit.”

U.S. Sen. Richard Blumenthal, D-Conn., said last week he would support the bill if it comes over to the Senate, noting the same concerns others in Connecticut’s delegation and the party have about the child tax credit.

“The child tax credit is really a core protection for kids and has proved so impactful in Connecticut, where the stereotype of wealth and high income belies the reality on the ground with kids needing this kind of protection,” Blumenthal said.

“I’m less than ecstatic” that the credit is not completely expanded or fully refundable, he added, “but I’d rather see this provision enacted than none at all.”