WASHINGTON DC – Top tax writers in Congress announced a deal Tuesday morning to beef up the child tax credit (CTC) and reinstate business deductions that were taken away to pay for the reduction of the corporate tax rate in the 2017 Tax Cuts and Jobs Act.
The CTC expansion would increase the maximum credit per child to $2,000 from $1,600 through 2025 while restoring business deductions for research and development costs, interest payments and capital investments.
The deal also has provisions on increasing the low-income housing tax credit and a carve-out for Taiwanese companies following an effort by the U.S. to reshore segments of the high-end semiconductor industry, much of which is based there.
To pay for the $80 billion deal, tax writers want to nix the employment retention tax credit, which they say has been aggressively marketed within the tax industry and has been a locus of fraudulent business activity.
“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs,” House Ways and Means Committee Chair Jason Smith (R-Mo.) said in a Tuesday morning statement.
Senate Finance Committee Chair Ron Wyden (D-Ore.) said the proposal could help as many as 15 million children who are close to the poverty line and would increase the stock of low-income housing across the country.
“At a time when so many people in Oregon and all across America are getting clobbered by rising rents and home prices, the improvements this plan makes to the Low-Income Housing Tax Credit will build more than 200,000 new affordable housing units,” he said in a statement.
“By incentivizing R&D, this plan is also going to promote innovation and help sharpen our economic competitiveness with China.”
What the final legislative vehicle for the tax deal could be, and whether it will make it into law before tax season starts on Jan. 29, remain to be seen.
But some rank-and-file senators are already sounding enthusiastic about the deal’s prospects.
Read more at The Hill