A day after Raphael Warnock held onto his seat in Georgia’s Senate race, giving Democrats a 51-49 edge in the Senate, Democrats are hoping that momentum can quickly turn into a financial boost for parents and kids.
While businesses press for changes to the corporate tax code that would prevent research-and-development expensing rules from changing next year, supporters of the temporarily expanded child tax credit think they see an opening to revive the lapsed payouts.
“Our ask is simple. If we can provide tax cuts for America’s corporations, we can certainly provide a tax cut for America’s kids,” Rep. Rosa DeLauro of Connecticut said in a Wednesday press conference where she called the chance at more payments “an antidote to inflation.”
“No corporate tax cuts without the child tax credit,” Democratic Sen. Sherrod Brown of Ohio said at the same event. “The deal is on the table. It’s the deal that’s on the table for Republicans to take.”
In a separate Wednesday press conference, Senate Majority Leader Chuck Schumer said “the child tax credit is something many of us are passionate about. And we would very much like to get it done.”
Last year, the American Rescue Plan temporarily turned the $2,000-a-child tax credit into a payout of $3,600 for children under age 6 and $3,000 for children between 6 and 17. The credit was completely refundable, meaning there was no work requirement through an earned income prerequisite.
Previously, Republicans had doubled the credit to $2,000 during the 2017 Tax Cuts and Jobs Act.
Critics have assailed the “full refundability” of the boosted credit, saying it was a disincentive to work. Supporters say it’s done no such thing. They point to numbers including Census findings that the larger credit and its monthly payments from July 2021 to December 2021 contributed to record lows for child poverty that year.
Democrats unsuccessfully tried extending the credit earlier this year. Now the question is whether the parties can work an end-of-year deal on corporate R&D expensing tax rules and the child tax credit — not to mention other tax measures like higher reporting thresholds for sales over platforms like eBay and Venmo.
“Not a single serious election analyst we know believes that Republican candidate Herschel Walker has a chance of winning the runoff,” James Lucier, managing director at Capital Alpha Partners, said in a note a day ahead of Warnock’s win.
So the end-of-year legislative landscape was already clearing in Lucier’s view, ushered by a mood shift from Republicans. Expecting “solid majorities” in the House and Senate, Republicans were “a hard ‘no’ on the Democrats’ principal policy goal, which is an extension, in some form, of the enhanced child tax credit.”
But while the GOP will control the House of Representatives, it will be a slimmer majority than originally thought, and the Senate will stay with Democrats.
“Republicans will need to rethink their categorical opposition to the [child tax credit],” he wrote, saying at one point the “door is opening for a robust tax-extenders package to pass by the end of the year.”
To be sure, any deal is far from assured and some observers say the chances are slim.
On one hand, Democrats need to find common ground with Republicans. Senate Minority Leader Mitch McConnell’s office did not immediately respond to a request for comment, but if past votes and floor speeches are any clue, he may take a dim view of anything he views making families “more reliant on the federal government.”
On the other side, some supporters of the boosted child tax credit may push against any alterations on payouts or who qualifies. DeLauro brought up the prospect of changes that would “weaken” or “put restrictions” on credit payouts.
“I’ll speak for myself. Hell no,” she said Wednesday.
The end-of-year push comes as new polling shows parents’ financial strain. One-quarter of all parents said there have been times in the past year when they were short on cash to buy food or pay the rent or mortgage, according to the Pew Research Center. Just over half of lower-income poll participants, making less than $43,800, said they’ve struggled to buy enough groceries or keep up with rent, the survey said.
The child tax credit has offered short-term help, but it’s no longer the right move for the country or its tax code, according to Scott Hodge, senior policy adviser at the Tax Foundation and the former president at the right-leaning think tank. It’s a point he’s made in a recent Wall Street Journal op-ed and a C-SPAN interview.
“What I would prefer to see the tax code do is promote economic growth, higher wages and higher living standards, rather than providing the sort of temporary benefits to people, which helps them in the short term, there’s no doubt about that,” Hodge said in a C-SPAN interview Monday. Four years before its 1997 enactment, Hodge argued for a child tax credit.
“But it doesn’t lift them up, it doesn’t lift their wages and their long-term standards of living. And that’s really what we want the tax code to do, not provide social benefits.”
“I’m tired of people calling programs like this a government handout,” Democratic Sen. Cory Booker of New Jersey said Wednesday. “It’s not. It’s an America elevation. We are a nation right now where, when we empower families — working families, American families — the whole country benefits.”
Victor Reklaitis contributed to this report
Source: https://www.marketwatch.com/story/we-would-very-much-like-to-get-it-done-do-congressional-democrats-have-end-of-year-momentum-for-a-second-round-of-boosted-child-tax-credit-payments-11670454017?siteid=yhoof2&yptr=yahoo