House Approves Legislation Expanding Child Tax Credit and Restoring Business Breaks”

The House achieved an uncommon bipartisan victory by passing a $79 billion tax cut package with broad support. The legislation aims to enhance the child tax credit for lower-income families and provide three tax breaks for businesses, securing policy wins for lawmakers on both sides of the aisle. Although the bill’s fate in the Senate is uncertain, the House’s success in passing consequential legislation marks a rare breakthrough for the chamber, which has faced challenges in pushing bills through.

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House

The tax cut package, passed with a vote of 357-70, garnered bipartisan backing. Speaker Mike Johnson, R-La., endorsed the bill after addressing concerns raised by GOP lawmakers, particularly regarding the expanded child tax credit. The bill does not address the $10,000 cap on property taxes or state and local taxes, a priority for Republican members from New York.

Despite uncertainties about the bill becoming law, Johnson expressed commitment to addressing the cap issue in future legislation. The tax cut bill is seen as crucial for conservative pro-growth tax reform, and Johnson emphasized its importance in adhering to the legislative process, moving through the House Ways and Means Committee before the full House vote.

The tax cut legislation caters to various priorities, including restoring immediate deductions for businesses investing in equipment and machinery and boosting the child tax credit for lower-income families. Democrats focused on the child tax credit, incrementally raising refundable amounts in the compromise bill. Estimates suggest an average tax cut of $680 for households benefiting from these changes.

While some Democrats viewed the bill as a compromise, with Rep. Danny Davis stating that “a half a loaf is better than none,” others, like Rep. Rosa DeLauro, criticized it for providing significant tax relief for the wealthy. Some Republicans, such as Rep. Thomas Massie, criticized the expanded child tax credit, likening it to “welfare.”

Despite objections from both ends of the spectrum, a substantial majority from each party supported the bill. The legislation includes measures beyond the child tax credit, such as enhancing a tax credit for rental housing construction and addressing tax issues for victims of natural disasters.

The bill’s passage in the House is viewed as a significant step, and proponents hope for a similar level of support in the Senate, despite potential challenges.