Senate Tax Writers Broach Subject Central to Advancing House Tax Bill

The Senate Finance Committee held a hearing on June 14th about family tax policies, a subject that could play a central role in whether the upper chamber supports a tax bill that is working its way through the House.  

Certain Senators want to include family tax relief in the House bill, which mostly provides relief to businesses. These Senators have focused on expanding the Child Tax Credit to what was included in the 2021 American Rescue Plan.

“Congress has a proven strategy for lifting millions of American children out of poverty and ensuring their families have a stronger opportunity to get ahead. Should we act on it? In my view, that ought to be an easy call,” said Senate Finance Chairman Ron Wyden (D-Ore.).

The American Rescue Plan increased the Child Tax Credit from $2,000 per child each year to $3,600 for each child up to age 5 and $3,000 up to age 17. The credit was fully refundable and did not include a work requirement. The cost of this provision was roughly $1 trillion over ten years.

Senate Democrats are the majority party and have 51 members. For the House tax bill to pass the Senate, it will likely require 60 votes. This means that passage of the bill will require the support from at least nine Senate Republicans – most of whom oppose expanding the Child Tax Credit.

Several Senate Republicans have argued that the Child Tax Credit from the American Rescue Plan provided so much relief that it created a disincentive for recipients to find work. They think a work requirement should be included if there is an expansion of the Child Tax Credit.

“If there is one message to distill today, it is that if America is serious about reducing poverty and supporting families, work works,” said Senate Finance Ranking Members Mike Crapo (R-Idaho).   “Without work, there is no chance society will achieve either aim.  Successes here will be grounded in those from the past.”

Senate Democrats oppose work requirements.

Time Line: 

The House is expected to pass the legislation in July.

Upon its passage, the bill is expected to travel to the Senate where it is currently not expected to pass. While Senators from both parties support the business tax incentives that are in the House bill, they disagree on how to structure the Child Tax Credit - assuming that one gets included in the House bill.

In his closing remarks, Chairman Wyden said that he would work with Ranking Member Crapo to figure out a way forward on the Child Tax Credit issue.

“We’re going to look at these [issues] and see where the possibilities are for bringing the committee together on this,” Wyden said.