(The Center Square) – A bipartisan group of U.S. senators and representatives unveiled a major piece of tax legislation Tuesday that has a significant chance of becoming law in the coming weeks.
The Tax Relief for American Families and Workers Act has broad bipartisan support after months of behind-the-scenes dealmaking as well as several key provisions enduring committee hearing markups.
Among other things, the bill includes tax relief for businesses hit with natural disasters and cuts to the reporting requirements for subcontract labor as well as an expansion of the Child Tax Credit while keeping the current work requirement. The legislation would peg the tax credit to inflation beginning in 2024.
The legislation also aims to help competitiveness with China, the lawmakers said in the announcement release, by “removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan.”
Lawmakers are unclear on whether this bill would be stand-alone or could be added to the government funding bills. Lawmakers face a looming government shutdown deadline with a partial shutdown scheduled for Jan. 19 and the remaining shutdown set for Feb. 2 unless lawmakers pass more funding.
Lawmakers could pass another short-term funding bill to buy more time for a full appropriations bill, but House Speaker Mike Johnson, R-La., would likely face pushback from some conservative lawmakers, who have been highly critical of the stopgap funding measures.
The new tax bill also allows businesses to immediately write off research and development done in the U.S. instead of waiting five years to do so and provides tax incentives for developers to build low-income housing.
“At a time when so many people in Oregon and all across America are getting clobbered by rising rents and home prices, the improvements this plan makes to the Low-Income Housing Tax Credit will build more than 200,000 new affordable housing units,” Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a statement. “By incentivizing R&D, this plan is also going to promote innovation and help sharpen our economic competitiveness with China and the rest of the world.”
Lawmakers also touted the bill’s elimination of the Employee Retention Tax Credit, saying it will save taxpayers $70 billion. Critics have raised ongoing concerns about waste and fraud within that COVID-era program.
“We even provide disaster relief and cut red tape for small businesses, while ending a COVID-era program that’s costing taxpayers billions in fraud,” House Ways and Means Chairman Jason Smith, R-Mo., said in a statement. “This legislation locks in over $600 billion in proven pro-growth, pro-America tax policies with key provisions that support over 21 million jobs.”