The White House and some Senate Democrats are reportedly eyeing a “Hail Mary” effort to revive their enhanced child tax credit this year.
Hans Nichols of Axios reports that the White House has engaged Senate Democrats about the idea and may be willing to back renewing some expired corporate R&D tax credits in exchange for Republican support.
The background: The enhanced child tax credit was enacted by Democrats in March 2021 as part of the American Rescue Plan. It expanded eligibility for the credit and upped the amount families could get from $2,000 per child to $3,000 or $3,600, depending on the age of the child. The credit, which included automatic monthly payments, was credited with lifting millions of children out of poverty. But the credit expired at the end of 2021 in the face of opposition from Republicans and Sen. Joe Manchin (D-WV). The credit was left out of the Inflation Reduction Act that Democrats passed last month.
What’s happening now: The 2017 Republican tax overhaul required companies to deduct their research and development expenses over five years as of 2022. There’s bipartisan support for revising that requirement and allowing companies to keep immediately deducting those expenses rather than spreading them out. Democrats hope that provides some leverage to renew the child tax credit.
"I think we should not be extending tax cuts for American corporations if we're not going to extend tax cuts for American children," Democratic Sen. Michael Bennet of Colorado told Insider. And Sen. Sherrod Brown (D-OH) told the site: "I cannot imagine the Senate will give big tax breaks to big companies and to wealthy people without taking care of kids first.”
Some Republicans may be open to a modified version of the child tax credit. “In response to the Supreme Court decision on Roe v. Wade, some Republican senators, including Mitt Romney (R-Utah) and Marco Rubio (R-Fla.), have been floating pro-family policies, including a cheaper and less expansive version of Biden's child tax credit,” Axios notes. But at least 10 Republican votes would be needed in the Senate.
The bottom line: Any potential action on a tax package will have to wait until after November’s elections.