Tax Bill Heads to Senate, Faces Uncertain Future
By Casey Harper | The Center Square
(Worthy News) – The U.S. House of Representatives passed a bipartisan tax bill with a vote of 357-70 late Wednesday, but that bill now faces an uncertain future in the Senate.
The Tax Relief for American Families and Workers Act had bipartisan support after months of behind-the-scenes deals involving both parties.
Whether the Senate can get the bill passed, though, remains unclear. The Senate faces several other deadlines, including a March deadline to reauthorize the Federal Aviation Act, two looming government shutdown deadlines the same month, as well as a border bill and a potential spending bill for Israel, Taiwan and Ukraine. Meanwhile, the potential impeachment of Homeland Security Secretary could soon land in the Senate’s lap.
The Senate is also evenly divided along partisan lines in an election year, with 33 up for election and one special election.
“A tax cut for businesses and a tax cut for families is a win-win,” Sen. Tammy Baldwin, D-Wisc., wrote on X, formerly known as Twitter. “I look forward to working with my Democratic and Republican colleagues to get this bill over the finish line in the Senate and give some relief to Wisconsinites.”
The bill in question expands the Child Tax Credit for families while keeping the current work requirement and pegs that tax credit to inflation starting in 2024.
In an effort to improve competitiveness with China, the bill also removes some double taxation for people and businesses that are in both the U.S. and Taiwan. The broad bill also includes other provisions, such as tax incentives for developers to build low-income housing, tax relief for businesses suffering from natural disasters and reductions to subcontract labor reporting requirements.
Under the legislation, businesses would be able to write off research and development done in the U.S. on their taxes the same years instead of waiting five years, which is the current legal standard.
A key provision of the bill ends the Employee Retention Tax Credit. Architects of the bill say that elimination will save taxpayers $70 billion and help offset other provisions in the legislation. That tax credit has been the subject of repeated criticism due to significant waste and fraud since its inception.
Critics have raised ongoing concerns about waste and fraud within that COVID-era program. In fact, the IRS announced last fall it would pause processing those claims because so many of the claims were fraudulent.
“The IRS believes many of the applications currently filed are likely ineligible, and tax professionals note anecdotally that they are seeing instances where 95% or more of claims coming in recent months are ineligible as promoters continue to aggressively push people to apply regardless of the rules,” the IRS said at the time.
Critics of the bill called it welfare expansion by another name.
“Last night, the House passed a tax bill that expands welfare benefits with virtually no limits, weakens welfare work requirements, and provides tax benefits to illegal aliens, all under the guise of ‘tax relief,’” said Rep. Andy Biggs, R-Ariz. “We needed much more opposition—especially from Republicans.”
As lawmakers deliberate, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, warned about any additions to the bill that could add more to the deficit.
The national debt is over $34 trillion and rising, with several government programs set for insolvency in the coming years. Meanwhile, interest payments on the national debt will soon be the biggest expense for the federal government.
“Given the size of our deficits and debt, Congress probably shouldn’t be making any major changes to the tax code outside of a plan to address our debt and reform the tax code,” MacGuineas said in a statement. “Congress certainly shouldn’t be making big fiscal policy changes before it’s even passed a budget.”