(TNS) — The families of more than 500,000 children in Pennsylvania under the age of 18 would benefit from an expanded child tax credit under proposed legislation that also calls for providing a tax break to those hurt by last year’s Norfolk Southern derailment in East Palestine, Ohio.
The benefits are included in a bipartisan, bicameral agreement announced Tuesday by Senate Finance Chair Ron Wyden, D-Oregon, and House Ways and Means Chair Jason Smith, R-Mo.
“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs,” Smith said. “We even provide disaster relief and cut red tape for small businesses.”
Rep. Mike Kelly, R-Butler and chair of the tax subcommittee in the House, welcomed the agreement.
“This package includes pro-growth tax policies, including the critical research and development expensing provision so American companies can invest and grow here at home,” Kelly said. “It allows American companies and workers to be more competitive with China. And it boosts the Republican-created Child Tax Credit, which strengthens and supports families. This deal locks in $600 billion in proven pro-growth, pro-American policies that will give American companies a major boost in the years to come.”
If Congress moves fast enough, the provisions could become law before Americans file their 2023 tax returns in April.
But lawmakers also have a lot of other things on their plate: A temporary spending bill to avoid a government shutdown this month, legislation funding federal agencies through Sept. 30, emergency aid for Ukraine and Israel, a bill to address the influx of migrants at the U.S. southern border, and perhaps House Republican efforts to impeach President Joe Biden because of his son’s financial dealings.
In addition, there are no assurances Wyden and Smith can muster the support they need to get 60 votes in the Democratic-controlled Senate and a majority of votes in the Republican-controlled House once the bill is written.
Still, as Wyden put it: “Given today’s miserable political climate, it’s a big deal to have this opportunity to pass pro-family policy that helps so many kids get ahead.”
Senate Majority Leader Chuck Schumer, D-N.Y., endorsed the framework, saying it “will significantly improve the lives of millions of working families and help mainstream businesses grow in today’s economy.”
The new tax provisions would expire at the end of 2025 along with much of President Donald Trump’s 2017 tax law. They would cost $78 billion over three years, to be offset by ending a business tax credit passed during the pandemic that was designed to help avoid layoffs.
The expanded child tax credit would allow more low-income families to receive a larger benefit than they now get because their tax liability is too low under the existing rules.
That would benefit 506,000 additional children in Pennsylvania, according to the progressive Center on Budget and Policy Priorities. Nationally, the expanded credit would benefit 16 million children and lift 400,000 of them out of poverty, according to the center.
In addition, the current maximum $2,000 credit would be adjusted for inflation beginning this year.
The bipartisan agreement is not as extensive as the proposal introduced last year by House Democrats, including Reps. Chris Deluzio, D-Aspinwall, and Summer Lee, D-Swissvale.
That measure would have increased the credit from $2,000 to $3,600 for children under 6 and to $3,000 to those aged 6-17 — the levels set by the 2021 stimulus bill. Those higher limits cut child poverty in half, according to the progressive Institute on Taxation and Economic Policy.
White House spokesman Michael Kikukawa said President Joe Biden “remains committed to fighting for the full expanded child tax credit.”
“The president is proud that the expanded child tax credit he fought for and signed into law cut child poverty nearly in half in 2021 and provided breathing room for tens of millions of families with children,” Kikukawa said. “We appreciate Chairman Wyden and Chairman Smith’s work toward increasing the child tax credit for millions of families and supporting hundreds of thousands of additional affordable homes, and look forward to reviewing the full details of their agreement.”
While expanding the child tax credit has been a top Democratic priority for years, the bill also provides several corporate tax breaks that Republicans have been pushing for.
They roll back provisions designed to help pay for the 2017 Republican tax law, which nevertheless increased the federal debt by an estimated $2 trillion over 10 years. Those provisions would speed up deductions for research expenses and improve the deductions for interest expenses.
Steve Wamhoff, the Institute on Taxation and Economic Policy’s federal policy director, said it was disappointing that some lawmakers refused to extend the child tax credit without also helping corporations.
“Child poverty is a problem. Corporations paying too much in taxes is not,” Wamhoff said. “Unfortunately, many members of Congress have refused to direct resources to help children in poverty unless an equal amount of resources is simultaneously directed toward corporate tax cuts.”
The legislation also would restore a housing tax credit designed to expand affordable housing units, and increase deductions for small business investments.
And it would exempt from taxes any disaster relief payments from the East Palestine derailment on Feb. 3, 2023.
These include any payments for losses, damages, declines in property values, or inconvenience paid by Norfolk Southern or any government agency. Norfolk Southern, for example, has agreed to reimburse homeowners in the affected area if they sold their homes for less than they were worth before the derailment.
The derailment occurred when dozens of cars of a Norfolk Southern train, many of them carrying toxic chemicals such as vinyl chloride, went off the tracks in East Palestine, just over the Ohio-Pennsylvania border.
The controlled release and burn of toxic chemicals days later prompted the evacuation of the Ohio village, sent a plume of black smoke into the skies over Beaver County, and left residents on both sides of the border fearful of the long-term health effects.
