See below for a statement from ITEP Federal Policy Director Steve Wamhoff on the tax deal announced this morning by Sen. Ron Wyden and Rep. Jason Smith.
STATEMENT of STEVE WAMHOFF, ITEP FEDERAL POLICY DIRECTOR:
Child poverty is a problem. Corporations paying too much in taxes is not. Unfortunately, many members of Congress have refused to direct resources to help children in poverty unless an equal amount of resources is simultaneously directed towards corporate tax cuts.
The result is the tax package just announced by Congressional leaders that would devote an equal amount of resources towards improving the Child Tax Credit (CTC), mainly for low-income families, and towards expanding the Trump tax cuts for corporations.
The fact that this legislation is a compromise does not mean that it is not worth enacting. The current CTC rules are poorly designed in that they limit the credit for those families who most need it because their earnings are low. The bill would loosen, although not eliminate, those limits, particularly for very low-income families with more than one child.
This falls far short of the reforms that Congress enacted for 2021, which dramatically reduced child poverty in America by removing the limits on the refundable portion of the credit entirely, meaning that the poorest children all benefited from it.
The tradeoffs for this boost to child and family wellbeing are high. The corporate tax breaks in this bill would provide huge benefits to corporations that seem scarcely in need of more favors from the government by undoing several cost-containing provisions that were included in the Trump tax law.
One would reinstate a tax break that supposedly subsidizes “research,” but the companies claiming it range from a brewery and a company that develops frozen and packaged foods to a sausage business and a company that develops electronic games for casinos, so it’s unclear what public value this so-called “research” has.
Another is “bonus depreciation,” which supposedly encourages investment but really rewards companies for doing what they would do even in the absence of any tax break. The main accomplishment of this provision is to allow many corporations to pay little or nothing in corporate taxes.
Yet another would allow a looser limit on the deductions that large companies take for interest payments they make on their debts. As arcane as this sounds, it ultimately will benefit the private equity industry and its practice of acquiring corporations and loading them up with debt, a technique that has led to the collapse of collapse of Toys “R” Us, Payless and other well-established companies.
As unwise as these corporate tax breaks are, there was a time when Congress might have enacted them without much consideration and without attaching provisions that also help low-income families. The hesitation of many lawmakers to provide any more corporate tax breaks and the desire of many to fully reinstate the 2021 expansion of the Child Tax Credit is a testament to the growing recognition that our tax code should work for everyone, not just the most powerful interests in Washington.
This content originally appeared on Common Dreams and was authored by Newswire Editor.
Newswire Editor | Radio Free (2024-01-16T16:49:17+00:00) ITEP Statement on Federal Tax Deal on Child Tax Credit, Business Tax Breaks. Retrieved from https://www.radiofree.org/2024/01/16/itep-statement-on-federal-tax-deal-on-child-tax-credit-business-tax-breaks/
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