The key Democratic and Republican negotiators in Congress sealed this Thursday Commit to a $78 billion deal to offer tax benefits to low-income businesses and familiesHowever, the package faces a tough road to be enacted in an election year.
The leaders of the Senate Finance Committee, Democrat Roy Wydon, and the House Ways and Means Committee, Republican Jason Smith, explained in a joint statement that the plan $33 billion to partially extend a major expansion of the child tax credit.
They added that another equal amount is to be restored to the category Tax deductions that have expired For companies and related to research and capital deductions.
In the scheme a Increase tax credits to encourage low-income housing developmentTax relief for disaster victims and tax breaks for Taiwanese workers and companies operating in the United States.
What is the Child Tax Credit?
Senator Wyden noted that 15 million children from low-income families “They will be better off as a result of this plan, and given the current miserable political climate, having this opportunity to pass pro-family policy that will help many children thrive is a big deal.”
In 2021, The expanded child tax credit cuts the child poverty rate by nearly half and costs about 105.1 billion dollars. The program ends in 2022, with levels set by former President Donald Trump’s 2017 tax cuts and capping the credit that low-income families can receive, reducing the amount families can claim per child. The idea is to reactivate this credit now because of unexpected results related to the reduction of child poverty in the US.
The agreement announced Tuesday would gradually raise the limit on how much low-income families can receive to match the amount for high-income families. I will too Most accessible credit for families with many childrenIt will allow parents to use their previous year’s earnings to claim a larger credit and automatically adjust for inflation starting in the current tax year.
Smith, for his part, delivered what he said would be “more than $600 billion in pro-growth, pro-America fiscal policies, with key provisions supporting more than 21 million jobs.”
The new law to expand the child tax credit may be seen as a political victory for President Biden and the Democrats, but at the same time the Republicans could promote tax breaks for businesses and score points in their favor.
Where does the money for the project come from?
Congressmen explained that the package would be financed through financial assistance Reduction in employee retention tax reliefA pandemic-era program to encourage employers to keep workers on the payroll.
The rare bipartisan agreement comes as Congress seeks to avoid a partial government shutdown and pass a short-term spending bill to temporarily fund the federal government to keep federal agencies operating through March. Some expenses are ending this week.
But any package of measures must be approved by the Democrat-controlled Senate and the Republican-controlled House of Representatives before President Joe Biden can sign them into law at a critical time in government funding negotiations. At the beginning of the election year.
Despite near-term hurdles in the plan’s process and approval, Wyden and Smith were optimistic, pointing out how unlikely it seemed that a bipartisan fiscal package would be achieved.
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