Senate at an ‘impasse’ over restoring child tax credit
Jemal Countess via Getty Images
Republicans in the chamber oppose the way the credit is calculated, making the passage of the tax package approved by the House in February uncertain.
With time running out before the April 15 tax filing deadline, negotiators in the Senate are at an “impasse” over increasing the child tax credit for low-income households, a Democratic spokesperson told Route Fifty.
Sen. Ron Wyden of Oregon, the chairman of the Senate Finance Committee, offered last week to remove a provision in the tax package the House passed in February that is opposed by Senate Republican leaders, according to Wyden’s spokesperson.
The provision at issue calculates parent’s tax credits based on last year’s income. Wyden’s offer would make it so that parents could not receive child tax credits based on their earnings last year if those earnings are higher this year.
In return, Wyden asked Sen. Mike Crapo of Idaho, the top Republican on the Finance Committee and the GOP’s lead negotiator, to slightly raise the overall amount in refunds that parents could receive. But Crapo “did not accept the offer,” Wyden’s spokesperson said.
The stalemate makes passage of the tax package in the Senate uncertain. The chamber is currently on a two-week Easter break and will not return until April 9, less than a week before the tax deadline. Though the IRS has said it could amend returns to include the changes, Wyden has said he wants the bill to pass before families file their returns.
A spokesperson for Crapo said the senator is still “committed to finding a bipartisan resolution that a majority of Senate Republicans can support.” But Crapo told reporters last week, according to Politico Pro, that Republicans are not willing to increase the amount in refunds as Wyden sought.
The expansion of child tax credits is not the only credit at stake. Also tied up in the impasse is restoration of a 12.5% increase in low-income housing tax credits that states received during the pandemic to finance the construction of more low-income housing. The increase expired in 2021, reducing the ability of states to address the nation’s housing shortage.
State and local governments have been pushing Congress to increase both credits, as have advocates. The idea, for instance, of allowing parents to receive higher refunds by calculating their tax credits on last year’s income has the backing of children’s advocates.
Patricia Cole, senior policy director for the advocacy group Zero to Three, argued in a statement that the debate in the Senate is misguided.
“The ‘lookback’ to the previous year’s earnings is beneficial to young children, especially infants whose birth or adoption can lead to lost earnings because of unpaid time off,” Cole said. “Overall, we’re concerned about the lack of focus on the ‘child’ in the debate about the child tax credit.”
“Poverty at an early age can undermine brain development, widening gaps that begin at birth,” she added. “It’s short-sighted to begrudge families a few extra dollars and the economic stability that could yield benefits for their young children in terms of later school success and earnings.”
But even if the lookback provision is removed, Crapo and Sen. John Cornyn of Texas still oppose the larger fact that much of the credit would go to people who earn nothing or so little that they don’t owe taxes.
Rather than reducing the taxes owed by working families, the proposal would give those who do not owe taxes “a check from the federal government regardless of whether you worked,” Cornyn said last week on the Senate floor. “It may be called a tax credit, but really it's a welfare payment.”
Crapo said in a statement in February that allowing people who are not working to receive a refund based on their earnings last year would be a “departure from longstanding policy tying the [child tax credit] to work.” Republicans have pushed to strengthen work requirements for those receiving federal aid, most recently for the Supplemental Nutrition Assistance Program, or SNAP.
Cornyn opposed a procedural move by Democratic Senate Majority Leader Chuck Schumer last week to bring the package to the floor for a vote. Under Senate procedures, Schumer needs 60 votes to bring the package up for a final vote. Cornyn urged at least 11 of the Senate’s 49 Republicans to block the measure.
Kery Murakami is a senior reporter for Route Fifty, covering Congress and federal policy. He can be reached at kmurakami@govexec.com. Follow @Kery_Murakami
NEXT STORY: States love March Madness. That’s a problem for many.