A $78 billion tax bill is likely to fail an important vote in the Senate this afternoon. This could mean that a lot of business and family-friendly provisions won’t be dealt with until next year.
The package was put forward by Sen. Ron Wyden, chair of the Senate Finance Committee, and Rep. Jason Smith, chair of the House Ways and Means Committee. It would increase the child tax credit and the low-income housing tax credit, bring back tax breaks for businesses that invest in research and development, stop tax fraud, improve relations between the U.S. and Taiwan, and help people who have been affected by disasters.
W yden is a Democrat from Oregon, and Smith is a Republican from Missouri.
In January, the bill passed the House of Representatives with a vote of 357 to 70. However, experts say it might not pass in the Senate. Today at 1:45 p.m. Eastern time, there will be a vote on procedure.
Christopher Niebuhr, a senior research analyst at Beacon Policy Advisors, an independent policy research company, says that the bill faces threats from the GOP as it moves from the House to the Senate, even though it has support from both parties in the House.
Idaho Republican Sen. Mike Crapo, who is also the senior member of the Senate Finance Committee, is leading the opposition to the bill, focusing on the parts that deal with child tax credits. Niebuhr told his clients in a note that he also wants to add GOP priorities to the bill to balance out parts that try to reach Democratic goals, like building affordable homes.
In an opinion piece for the Wall Street Journal, Sen. Thom Tillis, a Republican from North Carolina, said, “It’s hard to avoid the impression that Senate Democrats acting on behalf of the Biden administration cheated House Republicans.”
Like Crapo, Tillis doesn’t agree with the parts of the bill that deal with the child tax credit. He says, “Republicans made a major concession to Democrats—allowing the child tax credit to begin to transition into a de facto welfare program—in exchange for something Democrats already wanted: tax breaks for businesses that do research and development.”
Critics like Crapo, Tillis, and others say that the Wyden-Smith bill would make people less likely to work, while the Tax Cuts and Jobs Act of 2017 by former President Donald Trump does the opposite.
“Crapo’s main problem with the bill is the part that lets families use their earnings from the previous year to figure out their child tax credit benefit. “Crapo thinks that the provision would make some people who get the credit more likely to quit their jobs,” Niebuhr wrote.
“The real thing stopping the bill from becoming law is that GOP lawmakers think they can win big in November, which would give them more power in tax talks,” Niebuhr said.
The 2017 tax cuts are going to end, so next year’s tax talks will be mostly about replacing them. Trump wants the cuts to last longer.
Niebuhr wrote that the 2025 [Tax Cuts and Jobs Act] talks are the best chance for people who want the Wyden-Smith bill’s three business deductions to become law.
If the Republicans won the Senate, Crapo would be in charge of the Senate Finance Committee and have a lot of power in those talks. Niebuhr wrote that this is why many fellow GOP senators don’t want to go against him and are waiting for a better deal than the Wyden-Smith bill.
Sen. John Thune, a Republican from South Dakota, told Punchbowl News, “If we were lucky enough to play the odds and get all three next year, it’s obviously a much better bill.”
The Wyden-Smith bill will get some votes in the Senate, according to Punchbowl News. These senators are Markwayne Mullin from Oklahoma and Josh Hawley from Kansas.
They probably won’t be able to get the bill passed, though.
“We still don’t think this will become law.” The Senate is going on a 39-day vacation after Labor Day, so the bill wouldn’t be able to be voted on until after that. “After Labor Day, the race will be on to avoid a government shutdown on October 1 because none of the 12 appropriations bills have passed into law,” Chris Krueger, managing director of TD Cowen’s Washington Research Group, said in a note to clients.
Schumer is putting the bill up for a vote to make it official that GOP members voted against popular business deductions and an expansion of the child tax credit, even though Niebuhr wrote that the bill was likely to fail. “Senator J.D. Vance’s recent claim that Democrats have a “anti-family and anti-kid” agenda has made the issue even more important to Democrats.”
Vance is a Republican from Ohio and is running for vice president on Trump’s ticket.
