In a major development, a bipartisan deal has been announced to expand the child tax credit and provide tax breaks for businesses. The deal is worth a staggering $78 billion. However, it still needs to be written into legislation and secure votes before it becomes law.
The enhanced refundable child tax credits included in the deal aim to provide much-needed relief to struggling families and those with multiple children. One significant change is the lifting of the tax credit’s $1,600 refundable cap, which will now be adjusted for inflation. This expansion is expected to benefit approximately 16 million kids in low-income families.
The impact of this deal goes beyond just providing financial relief. The expansion of the child tax credit is projected to reduce child poverty and lift as many as 400,000 children above the poverty line in the first year alone. This is especially crucial as Democrats highlight that child poverty rose after a smaller child tax credit, which had previously been passed, expired.
Despite its commendable goals, the deal does fall short when compared to the monthly payments offered under the American Rescue Plan. Nonetheless, the White House remains committed to fighting for a full expanded Child Tax Credit.
On the other hand, Republicans are motivated to revive expired portions of the 2017 Trump tax cuts for businesses. The deal includes various provisions for business tax cuts and deductions, providing a boost to the economy.
Senator Ron Wyden is optimistic about passing the deal in time for the beginning of the tax filing season. However, there is no guarantee, as Congress has several pressing priorities, including averting a government shutdown and completing the funding process.
If this deal successfully passes, it would be a rare success story of active legislating by a divided Congress. It shows that bipartisan efforts can still produce significant results, even in a politically polarized environment.