A Bipartisan Agreement Sealed on $78 Billion Tax Relief Plan for Businesses and Low-Income Families
Democratic and Republican leaders in Congress have reached a historic compromise on a $78 billion tax relief plan designed to offer benefits to businesses and low-income families. The plan, announced by the leaders of the Senate Finance Committee, Democrat Roy Waden, and the House Ways and Means Committee, Republican Jason Smith, faces a challenging road to enactment in an election year.
The plan includes $33 billion to partially extend an important expansion of the child tax credit, as well as a similar amount intended to restore a series of tax deductions for companies related to research and capital investments. Additionally, the plan aims to increase a tax credit to encourage low-income housing development, provide tax relief for disaster victims, and offer tax breaks for Taiwanese workers and companies operating in the United States.
Senator Wyden emphasized that the plan would significantly benefit 15 million children from low-income families. He highlighted the impact of the expanded child tax credit, which in 2021 cut child poverty rates in half, and stressed the importance of passing pro-family policies in such a challenging political climate.
The new law to expand the child tax credit could represent a political victory for President Biden and Democrats, while at the same time allowing Republicans to promote tax breaks for businesses.
When questioned about the financing of the project, Congressmen explained that the package would be funded by reducing the employee retention tax break, a pandemic-era program to encourage employers to keep workers on the payroll.
While the rare bipartisan agreement is a significant achievement, the plan must now navigate the hurdles of being approved by the Senate, controlled by Democrats, and the House of Representatives, controlled by Republicans, before President Joe Biden can sign it into law. This comes at a complicated time of negotiations for government financing and at the start of an election year.
Despite the foreseeable obstacles, Wyden and Smith expressed optimism about the plan’s approval, highlighting the unlikeliness of achieving a bipartisan fiscal package and noting the benefits it would bring to businesses and low-income families.