The U.S. House of Representatives on Wednesday overwhelmingly approved a $78 billion bipartisan package of tax breaks for businesses and low-income families that was put on a fast track even as Congress remains deadlocked over broader fiscal issues.
The temporary tax measure, which would increase the Child Tax Credit and reinstate income deductions on business research and development and certain capital investments through 2025, was approved on a strong bipartisan 357-70 vote.
The measure was a rare example of cooperation between Republicans and Democrats amid a deadlock over government funding, including aid for Ukraine and Israel, that has been held up in Congress for months over Republican demands for stronger controls on the southern U.S. border.
It got a green light by House Speaker Mike Johnson after negotiations with some of his fellow Republicans who objected to its lack of tax relief for state and local taxes (SALT).
Johnson agreed to continue working with members and House Ways and Means Committee Chairman Jason Smith “to find a path forward for legislation related to SALT,” Johnson spokesperson Athina Lawson said in a statement.
FAMILY, CORPORATE WELFARE?
Hardline conservative Republicans voiced objection to the package during debate because it would increase the amount that Child Tax Credit claimants can receive as cash payments, to up to $2,100 per child by 2025 at a total cost of $33.5 billion.
“This is not a tax bill, it is a welfare bill in drag,” said Republican Representative Matt Gaetz, who added that it also provided “corporate welfare.”
Representative Rosa DeLauro, a progressive Democrat, said the bill would heap more tax breaks on corporations while failing to adequately address poverty.
“I cannot vote for a deal that lopsidedly benefits big corporations,” DeLauro said. “The deal is inequitable.”
DEDUCTIONS RESTORED
Smith, who brokered the deal that combines tax priorities of both parties, emphasized the business benefits of restoring immediate deductions passed under former President Donald Trump which expired in 2022.
The bill also would eliminate double taxation of businesses and workers that operate both in the U.S. and Taiwan, including semiconductor manufacturers building U.S. factories.
Smith said these provisions, estimated to cost $34.3 billion over 10 years, would encourage more than $470 billion in new research and development and small business capital investment and create more than 900,000 jobs.
The bill also faced some opposition over its lack of relief for state and local taxes and mortgage interest.
The Republican-passed tax-cut bill passed of 2017 capped the individual deductions for mortgage interest and state and local tax payments to help pay for business tax cuts.
Some lawmakers in New York and California have sought to remove the caps, which led to higher overall tax bills for many taxpayers despite lower tax rates.
Johnson in a statement praised the tax breaks package as “important bipartisan legislation to revive conservative pro-growth tax reform.”
(Reuters)
