House set to vote to expand child tax credit, beef up corporate tax breaks

The House on Wednesday prepared to approve bipartisan legislation to cut taxes for working families and restore certain corporate tax breaks, but the bill faces long odds in the bitterly divided Senate, as lawmakers rush to send the measure to President Biden’s desk before the end of tax filing season in April.

The bill would expand eligibility for the child tax credit among the lowest-income families and adjust payments for inflation for the 2024 and 2025 filing years.

It would also bolster certain business tax credits — including deductions for research and development, interest expenses and investments in equipment — that were limited in an effort to cap the total costs of President Donald Trump’s 2017 tax cut law.

But in the Senate, where Republicans can block the bill with a filibuster, the measure began losing momentum Wednesday afternoon.

Sen. Chuck Grassley (R-Iowa) told The Washington Post that he opposed the measure, which nonpartisan estimates say could lift 400,000 children out of poverty, because it could help Biden’s reelection campaign.

“I think passing a tax bill that makes the president look good — may allow checks before the election — means that he can be reelected and then we won’t extend the 2017 tax cuts,” Grassley said.

Sen. Mitt Romney (R-Utah), who supported previous child-tax-credit expansions, called the new legislation “excessive” and said it would turn into “another entitlement program which is massively expensive.”

Sen. Thom Tillis (R-N.C.), another conservative whom Democrats hoped to win over, said he hated elements of the bill, including the way authors Sen. Ron Wyden (D-Ore.) and Rep. Jason T. Smith (R-Mo.) proposed to pay for the tax cuts, the structure of credits for families, the bill’s timing at the start of tax season and that it left out other corporate tax cuts the GOP hopes to include in legislation in 2025.

The bill also risks losing steam on the left. Rep. Rosa DeLauro (D-Conn.), a major child tax credit booster, said she would vote against the legislation, saying it did not go far enough to balance families’ interests with corporate tax relief.

Some liberal lawmakers say the legislation would give Democrats leverage to expand the child tax credit again in future debates, but DeLauro said Wednesday’s bill was a missed opportunity.

“Don’t tell me next year that you’re going to do this,” she said. “You had a chance to do it now. That’s the way the place works.”

The child tax credit expansion would ensure that more of the poorest families — who are traditionally excluded from the credit because they don’t owe any income tax — would qualify for at least some assistance. It would allow the lowest-income families to claim the credit for each child; the current credit allows those at the lowest end of the income spectrum to only receive payments for one child. The expansion would also permit some recipients to submit the previous year’s tax return to the IRS to receive a larger credit.

Treasury Department officials and Senate negotiators speaking on the condition of anonymity because they were not authorized to comment publicly said taxpayers would not be required to file amended tax returns to claim the larger credit.

“This is a win for millions of small businesses, a win for millions of working families, a win for America,” Smith said during debate on the House floor.

Disputes among House Republicans on Tuesday threatened to derail the legislation. Politically vulnerable New York Republicans from districts Democrats are targeting this fall threatened to block House business over the bill because it did not remove a $10,000 cap on the state and local tax deduction, which allows filers to deduct taxes paid to states and municipalities from their federal returns. The deduction, known as SALT, is popular in high-tax states, and the limit was also imposed in the 2017 Trump tax law.

From the other end of the debate politically, some members of the archconservative House Freedom Caucus oppose the child tax credit provisions and liken them to a welfare expansion.

The Republican New Yorkers — Reps. Anthony D’Esposito, Nick LaLota, Michael Lawler and Andrew R. Garbarino — met Tuesday with House Speaker Mike Johnson (R-La.) and agreed that the House would work to find a way to vote on a bill to adjust the SALT deduction, and they dropped their protest. So Johnson pressed forward to put the bill up for a vote under a suspension of House rules, which requires a two-thirds majority to pass. The GOP dissent means Johnson will have to rely on Democratic votes to carry the measure, as he has been forced to do for every major piece of legislation since taking over the speakership in October.

The push by Johnson follows weeks of internal discussions among Republicans in both the House and Senate about whether to advance the legislation.

On social media, conservative and right-wing accounts circulated a false claim that the legislation would enable undocumented immigrants to claim the child tax credit. That is not true — the law does nothing to alter a provision requiring Social Security numbers to access the benefit — but the concerns reached far-right lawmakers in the Capitol, with House Freedom Caucus Chairman Bob Good (R-Va.) telling reporters that he would not support “child tax credits going to illegals.” House Ways and Means Chairman Smith responded to these criticisms, emphasizing in social media posts to his fellow Republicans that the legislation would do nothing to change the number of immigrants who claim the credit.

Heritage Action, a conservative advocacy group, urged lawmakers to oppose the legislation in an email Monday, arguing that it would give too much money to families who do not work. “The bill’s cash welfare benefits are socially harmful and provide a steppingstone to President Biden’s work-free ‘child allowance,’” the email said.

But momentum grew from outside groups and the business lobby to enact the changes. At a private meeting earlier this week of the Republican Study Committee, a group of House GOP conservatives, some advocacy organizations voiced their support for the measure. Pro-life groups have also endorsed the measure.

“There’s no real good reason to vote against it,” Grover Norquist, president of the anti-tax group Americans for Tax Reform, said. “This is a powerful, pro-growth tax cut. … What’s not to like for Republicans?”

Also crucial was the decision of one particularly prominent Republican not to oppose the legislation, at least so far. Trump appears to have helped sink an emerging bipartisan Senate compromise on immigration and Ukraine, and if he had come out against the tax deal, too, many Republicans might have opposed it. An unsigned, eight-page PDF circulating among congressional GOP offices appeared to be written to persuade Trump supporters not to back the deal, according to a copy of the memo obtained by The Washington Post.

“Don’t undercut President Trump and his ability to provide bigger and better tax relief,” it says.

But Norquist and other supporters of the legislation argued to Trump’s advisers that the deal represents a victory for the former president, saying it amounts to Democrats joining Republicans to extend a key Trump policy initiative. As of Wednesday evening, the former president had not weighed in on the measure.

Marianna Sotomayor, Liz Goodwin and Theodoric Meyer contributed to this report.