WASHINGTON (Reuters) -The U.S. House of Representatives on Wednesday prepared to vote on a $78 billion bipartisan package of tax breaks for businesses and low-income families that was put on a fast track even as Congress remains deadlocked over broader fiscal issues.
The temporary tax measure, which would increase the Child Tax Credit and reinstate deductions on business research and development and capital investments through 2025, was given a green light by House Speaker Mike Johnson after negotiations with some of his fellow Republicans who objected to its lack of tax relief for state and local taxes (SALT).
Johnson agreed to continue working with members and House Ways and Means Committee Chairman Jason Smith “to find a path forward for legislation related to SALT,” Johnson spokesperson Athina Lawson said in a statement.
The tax breaks measure is being considered under a suspension of House rules, which requires a two-thirds majority vote — a difficult threshold to meet, especially with defectors expected among both Republicans and Democrats.
A floor vote was expected after 8 p.m. EST (0100 GMT).
FAMILY, CORPORATE WELFARE?
Hardline conservative Republicans voiced objection to the package during debate because it would increase the amount of that Child Tax Credit claimants can receive as cash payments, to up to $2,100 per child by 2025 at total cost of $33.5 billion.
“This is not a tax bill, it is a welfare bill in drag,” said Republican Representative Matt Gaetz, who added that it also provided “corporate welfare.”
Representative Rosa DeLauro, a progressive Democrat, said
the bill would heap more tax breaks on corporations while failing to adequately address poverty.
“I cannot vote for a deal that lopsidedly benefits big corporations,” DeLauro said. “The deal is inequitable.”
“This corporate tax windfall bill, thinly disguised as help for children, offers even more tax advantages to corporations that are paying a mere 7.8% tax rate,” Doggett said. “A working mother of two earning the average wage pays a federal effective rate of 20%.”
DEDUCTIONS RESTORED
The chairman of the House Ways and Means Committee, Republican Representative Jason Smith, who brokered the deal that combines tax priorities of both parties, emphasized the business benefits of restoring immediate deductions passed under former President Donald Trump which expired in 2022.
The bill also would eliminate double taxation of business and workers that operate both in the U.S. and Taiwan, including semiconductor manufacturers building U.S. factories.
Smith said these provisions, estimated to cost $34.3 billion over 10 years, would encourage over $470 billion in new research and development and small business capital investment and create over 900,000 jobs.
Despite opposition from the far right and far left, the measure advanced by a 40-3 vote in the House Ways and Means Committee, indicating bipartisan support.
The bill also faced some opposition over its lack of relief for state and local taxes and mortgage interest.
The Republican-passed tax-cut bill passed in 2017 capped the individual deductions for mortgage interest and state and local tax payments to help pay for business tax cuts.
Some lawmakers in New York and California have sought to remove the caps, which led to higher overall tax bills for many taxpayers despite lower tax rates.
Johnson in a statement praised the tax breaks package as “important bipartisan legislation to revive conservative pro-growth tax reform.”
Source: Economy - investing.com
