Late Monday afternoon, Congressional leaders announced their long-awaited omnibus spending package which will fund the government through September 2023. The good news: the bill does not include needless corporate tax giveaways. The bad news: it also leaves out any expansion of the Child Tax Credit.
Ultimately, the conservative position on the credit triumphed. The credit was not worth the cost if it cost, well anything.
This fall, as lobbyists descended on the Hill to pressure Congress into passing a set of corporate tax breaks before the year's end, some progressive activists and lawmakers settled on a strategy to make any potential tax package at least mildly palatable: Tax breaks for businesses must be paired with an extension of the Child Tax Credit enhancements that were enacted in 2021.
Those enhancements increased the credit from $2,000 to $3,000 and to $3,600 for children under age 6, but more significantly, they removed limits on the refundable part of the credit, which helps families who most need it. Under permanent law (the credit that was in effect for years before and after 2021), the tax code actually states that certain families make too little money to receive the full credit. That is, a credit which is supposed to help children is denied to them if they are too poor. Last year, all children could receive the full credit if their family income was less than $150,000 (or less than $112,500 for most single parents). The 2021 credit enhancement also made the credit available to families in monthly installments to help match their normal household expenses rather than as a year-end lump sum.
The results of the credit enhancements were dramatic and immediate. Child poverty was cut nearly in half. The 2021 credit pulled more people above the poverty line than SNAP and unemployment insurance combined. The enhanced credit was especially important for Black and Hispanic families. As a result of Congress's failure to extend the credit enhancements, ITEP estimates that 45 percent of Black children and 42 percent of Hispanic children will not receive the full credit next year because the arbitrary limits on the refundable portion of the credit are in effect again.
Given the enormous success of the 2021 credit, many progressive groups were at least open to an unsavory package of tax breaks for big businesses if lawmakers would in turn help children and families by enhancing the Child Tax Credit. The tax package pushed by corporate lobbyists included a deduction for "research" that was promoted by companies making frozen foods and casino games, an interest deduction that would encourage private equity funds to load up companies with debt, and a bonus depreciation break that would accomplish little aside from allowing big companies to save billions on their tax bills.
Sen. Sherrod Brown framed the position of many progressives succinctly this September when he said, "No more tax breaks for big corporations and the wealthy unless the Child Tax Credit is with it. I'll lay down in front of a bulldozer on that one."
Conservative lawmakers dutifully expressed their own position on the issue. Cutting child poverty was not worth it if it could even be theorized that rich people might end up slightly less rich. The White House, for its part, signaled that it could be flexible on the details of a CTC expansion that could be part of such a deal.
But ultimately, the conservative position on the credit triumphed. The credit was not worth the cost if it cost, well anything. That included Republicans giving up their own package of corporate tax breaks. Perhaps they believe they can get a better deal next Congress with the House Republican majority. Let's hope that Sen. Brown carries his promise into the new year.
In the end, there should be few tears shed that the corporate lobbyists lost on this one. But there is a certain amount of ire that rises up inside one's heart knowing the only thing that could kill Congress' appetite for corporate tax breaks is a simple request that they boost the economic security of children and families as well.
This content originally appeared on Common Dreams and was authored by Joe Hughes.
Joe Hughes | Radio Free (2022-12-21T19:14:17+00:00) Congress Decides Corporate Tax Cuts Are Too Expensive If It Means Also Helping Children. Retrieved from https://www.radiofree.org/2022/12/21/congress-decides-corporate-tax-cuts-are-too-expensive-if-it-means-also-helping-children-2/
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