(C) Common Dreams
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Lawmakers release deal to expand Child Tax Credit, business deductions [1]
['Https', 'Www.Semafor.Com Author Joseph-Zeballos-Roig']
Date: 2024-01
The deal would revamp the current Child Tax Credit by adjusting it for inflation and increasing its generosity for the poorest families, though it wouldn’t resemble the pandemic-era program that temporarily issued checks to families every month. By 2025 it would increase the maximum value to $2,100 and let families take the full credit as a cash payment if they have no tax liability.
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Currently, low-income parents can only receive up to $1,700 as cash for the 2024 tax filing season. Crucially, it would also include a faster phase-in of the credit for households with multiple children. The left-leaning Center on Budget and Policy Priorities estimated the combined changes would bring 400,000 kids out of poverty in its first year.
For businesses, the agreement would extend rules allowing companies deduct the cost of capital expenses immediately, instead of spreading them over years; establish a larger interest deduction; and restore the ability for businesses to immediately write off domestic research and development expenses. It also raises the limit on how much businesses can pay independent contractors before being required to report it to the IRS to $1000 from $600 today, and sets it to rise with inflation.
Kyle Pomerleau, a tax expert at the right-leaning American Enterprise Institute, told Semafor the business benefits “would increase cash flow for companies, but it would change nothing about the economy in the long run because it’s all temporary” and therefore wouldn’t influence investment decisions.
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The deal also boosts the Low Income Housing Tax credit to encourage the development of more affordable housing, establishes relief for Taiwanese businesses and individuals operating in the US from double taxation, and provides tax relief to disaster victims.
The deal is financed by ending the Employee Retention Tax Credit program over a year before its current 2025 expiration date. The pandemic-era measure was aimed at saving jobs as businesses faced shutdowns, but has become a costly magnet for scams and fraud.
The Wyden-Smith agreement is intended to be a three-year deal running through the end of 2025, when much of the GOP’s signature tax law is scheduled to expire and setting up a multi-trillion dollar fight over the tax code.
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[1] Url:
https://www.semafor.com/article/01/16/2024/top-lawmakers-release-bipartisan-tax-deal-expanding
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