U.S. businesses eager for a tax deal announced by two powerful U.S. lawmakers can’t yet bank on the corporate breaks.
The measure picked up the crucial backing of Senate Majority Leader Chuck Schumer on Tuesday but it still faces significant challenges to pass Congress in time for the Jan. 29 start of tax filing season.
The package, drafted by Democratic Senator Ron Wyden of Oregon and Republican Representative Jason Smith of Missouri, who lead Congress’s two tax-writing committees, includes roughly $80 billion in breaks for research and development, business interest and equipment depreciation, and changes to the child tax credit that benefit the working poor.
The retroactive tax break for U.S.-based research and development would be a boon to technology and aerospace companies with large domestic research activities. Manufacturers also stand to benefit.
But their deal is just the first step to building the broad support needed to pass the biggest tax deal in years in both the House and Senate. They have just days to shore up support, with the House Ways and Means panel expected to consider the legislation on Friday, a person familiar with the plans said.
Representative Richard Neal of Massachusetts, the top Democrat on the House panel is still discussing the plan with his colleagues.
Mike Crapo of Idaho, the top Republican on the Senate panel, wants to see changes made to the bill. “There are details that have to be worked out,” he said, adding that he doesn’t see Congress meeting the Jan. 29 deadline.
So far, Republican House Speaker Mike Johnson has been silent on the agreement. President Joe Biden is also not yet on board.
“He remains committed to fighting for the full expanded Child Tax Credit. We appreciate Chairman Wyden and Chairman Smith’s work toward increasing the Child Tax Credit for millions of families and supporting hundreds of thousands of additional affordable homes, and look forward to reviewing the full details of their agreement,” White House spokesman Michael Kikukawa said.
Those obstacles work against efforts to include the tax deal in urgent legislation needed to avert a shutdown on Saturday, which the Senate will begin to debate later Tuesday. Without the deadline, it is easier for lawmakers to hold up the tax bill and seek changes.
The package will likely need strong Democratic support to pass the House given the razor-thin House GOP majority which means any three Republicans can work to block legislation from consideration.
The deal’s child tax credit provisions would help the families of 15 million children by raising after-tax income. It would also change the low income housing tax credit to allow for the building of 200,000 new affordable housing units, according to a statement from Wyden. The left-leaning think tank Center for Budget and Policy Priorities says the proposal would lift 400,000 children out of poverty in the first year.
The proposal would not change the current limit deductions for state and local taxes. Republican lawmakers from high-tax states said last fall that Johnson promised them that any tax bill that passes Congress will address the $10,000 cap.