House and Senate tax writers are closing in on an agreement to expand the Child Tax Credit in return for extending and restoring some popular tax benefits for businesses.
“We’ve made a substantial kind of progress. We’ve already prevailed on a crucial issue, which is that there’s going to be equal treatment for working families with business,” Senate Finance Chair Ron Wyden, D-Ore. told Semafor.
Wyden said he believed that Jan. 29 — the start of tax filing season — amounted to a deadline to have the changes reach President Biden’s desk. He plans to brief Senate Finance Committee Democrats on the latest in the tax negotiations on Wednesday.
On Tuesday, Wyden met to discuss the potential deal with House Ways and Means Committee Chair Jason Smith, R-Mo., and Senate Finance Committee Ranking Member Mike Crapo, R-Idaho. “Things are progressing really, really well,” Smith told reporters.
A person briefed on the talks said the total cost of the package is likely to range between $50 billion-to-$80 billion, though they added that negotiations were ongoing and the amount wasn’t final. Democrats are looking to expand the Child Tax Credit by bumping up the portion that families can receive as a cash payment if they don’t owe any more money to the IRS. (Currently, only $1,600 of the $2,000-per-child credit can be claimed as cash).
Republicans are focused on renewing a host of valuable deductions touted as good for business investment. Some likely provisions include extending rules that let companies deduct the cost of capital expenses immediately, instead of spreading them over years, and restoring the ability for businesses to immediately write off research and development spending. Many Democrats back these measures as well, which have also attracted the support of conservative groups like Americans for Tax Reform and the National Taxpayers Union.
Getting a tax deal through both chambers of Congress is difficult enough even when it’s the main item on the menu. Right now, negotiators are trying to slip one on the table as a side-dish while lawmakers wrestle over bigger issues, like complex border negotiations that would change asylum laws in exchange for unlocking GOP support for Ukraine aid. It’ll be a tricky strategy to pull off, especially since it’s not clear that Senate GOP leadership would even endorse a deal if it materializes.
One plugged-in tax lobbyist texted that he believed the talks amounted to something out of the late 1980s movie “Field of Dreams,” where Kevin Costner builds a baseball field on his Iowa cornfield to lure the ghosts of baseball legends. “There’s no real plan beyond ‘if you build it, they will come,’” the lobbyist said.
Room for Disagreement
Wyden says he’s optimistic about assembling a tax package that wins over enough Republicans and Democrats in both chambers. “We’re homing in on a very specific target, which is to get this done in time for filing season and I’m going to pull out all the stops and stay at it every day,” he told Semafor.