On Wednesday, January 31, 2024, the U.S. House of Representatives overwhelmingly endorsed a $78 billion bipartisan tax relief package aimed at businesses and low-income families. This swift approval comes amidst broader fiscal gridlock in Congress, which has stalled progress on issues like government funding, including aid for Ukraine and Israel, due to Republican insistence on stricter border controls in the southern United States.
The temporary tax measure, approved with a robust bipartisan vote of 357-70, enhances the Child Tax Credit and reinstates income deductions for business research and development, along with certain capital investments until 2025.
This accord represents a rare instance of collaboration between Republicans and Democrats. Nevertheless, the deadlock over government funding persists, prompting House Speaker Mike Johnson to greenlight the measure after negotiations with fellow Republicans regarding concerns over the absence of tax relief for state and local taxes (SALT).
Acknowledging criticisms from hardline conservative Republicans, the bill drew objections during debate for its expansion of Child Tax Credit cash payments to $2,100 per child by 2025, amounting to a total cost of $33.5 billion. Representative Matt Gaetz characterized the bill as more of a welfare measure than a tax bill, with concerns raised about corporate welfare.
Representative Rosa DeLauro, a progressive Democrat, expressed reservations about the bill favoring corporations over poverty alleviation efforts, highlighting concerns about its fairness.
Chairman Jason Smith of the House Ways and Means Committee, who brokered the bipartisan deal, emphasized the benefits to businesses through the reinstatement of immediate deductions passed during the Trump administration. He underlined provisions aimed at preventing double taxation of businesses and workers operating in both the U.S. and Taiwan, projecting significant boosts to research and development, small business capital investment, and job creation.
While the bill gained traction, it faced criticism for its failure to address relief for state and local taxes and mortgage interest. The 2017 Republican tax-cut bill imposed caps on individual deductions for mortgage interest and state and local tax payments to offset business tax cuts, a move contested by lawmakers in New York and California.
Johnson lauded the tax breaks package as pivotal bipartisan legislation conducive to conservative, pro-growth tax reform.
(Reuters)
