Senate Republicans on Thursday blocked a bipartisan tax package that would have temporarily expanded the child tax credit and restored some business tax benefits.
The bill failed to advance in a procedural vote of 48-44, short of the 60 it required to succeed.
Democrats brought up the vote, which was expected to fail, as they seek to spotlight the child tax credit in a political messaging push ahead of the November elections, giving vulnerable members of their party a chance to vote to expand the tax credit and putting Republicans on the spot over the issue.
The bipartisan tax bill passed the Republican-led House earlier this year, but has run into resistance from some Republicans in the Senate. Following House passage of the bill, some Senate Republicans raised issues with the legislation, with some saying they wanted to push for it to be amended.
In the run-up to elections, Democrats have put a series of bills on the Senate floor that have failed to advance due to GOP opposition, including legislation related to contraception and IVF., issues that Democrats see as politically popular. Republicans have criticized what they have called a “summer of show votes.”
The Senate passed legislation on Tuesday, however, aimed at protecting children online in a broad bipartisan vote.
The Senate tax bill vote also gave Democrats an opportunity to push back against comments from Republican vice presidential candidate Sen. JD Vance of Ohio.
Vance has falsely claimed that Vice President Kamala Harris, the presumptive Democratic presidential nominee, is calling to end the child tax credit. Harris has actually called for years to increase the child tax credit.
Senate Majority Leader Chuck Schumer said in remarks on the floor this week that “some Republican senators – like the junior senator from Ohio – have claimed laughably that Democrats, somehow, oppose the Child Tax Credit.”
“This is plain old nonsense,” Schumer said. “Democrats do not oppose the Child Tax Credit whatsoever. On the contrary, we strongly support it.”
Child tax credit expansion
The package would provide a larger child tax credit in the first year to the low-income families of roughly 16 million children, or more than 80% of those who currently don’t receive the full credit because their families earn too little, according to the left-leaning Center on Budget and Policy Priorities. These families would be able to claim more of the credit, and the legislation would also increase the maximum refundable credit for households who owe little or no income taxes.
The bill would lift at least half a million children out of poverty and improve the financial situation of about 5 million more children who would remain below the poverty line, once the measure was fully in effect in 2025, according to the center. However, it does not go as far as the American Rescue Plan’s enhancement to the child tax credit, which cut child poverty nearly in half but was only in effect for 2021.
Under the current package, low-income families with more than one child would receive the same credit for each of their children, just as higher-income households already do. Also, families would have the choice of using their earnings in the current year or prior year, in case their income is volatile.
The credit would be adjusted for inflation starting in 2024, which is expected to bump up the maximum credit to $2,100 per child in 2025, up from the current $2,000, according to the Center on Budget and Policy Priorities. The provisions would be in effect for three tax years from 2023 through 2025.
Some Republicans have voiced concerns that the legislation would disincentivize work or allow undocumented immigrants to claim the credit, but House Ways and Means Chairman Jason Smith, a Republican from Missouri, has stressed that the bill maintains the minimum earnings threshold of $2,500 needed to begin to claim the credit and the requirement that children must have Social Security numbers for their families to file for the credit.
Business tax benefits
The package would have also temporarily restored several business tax benefits that had been part of the Republicans’ 2017 Tax Cuts and Jobs Act.
It would have once again allowed businesses to immediately deduct the cost of their US-based research and experimental investments instead of over five years, as well as enable them to immediately deduct 100% of their investment in machinery and equipment. Some 3.8 million small businesses claimed these tax incentives in 2021, according to the office of Sen. Ron Wyden, an Oregon Democrat and co-sponsor of the legislation, citing Treasury data.
Plus, the legislation would have restored a more generous limitation on the deductibility of interest expenses, which mainly affects companies that have a lot of debt. These three provisions would have run through 2025.
The measure also contained relief for those affected by disasters, including recent hurricanes, flooding, wildfires and the train derailment in East Palestine, Ohio, last year. And it would have enhanced the low-income housing tax credit available to states, which would have added more than 200,000 affordable housing units nationwide, according to Wyden’s office.
It would have also accelerated the deadline for filing backdated claims for the Employee Retention Tax Credit, a Covid 19-era program that has been subject to widespread fraud, to January 31, 2024, instead of April 15, 2025. That provision is estimated to save taxpayers more than $78 billion – offsetting most of the cost of the package, according to the Joint Committee on Taxation.
CNN’s Daniel Dale contributed to this report.
