Efforts to expand the federal child tax credit will likely fall short during this session of Congress after Senate Republicans blocked a bipartisan bill with tax breaks for low-income families and businesses on Thursday.
While the bill cleared the House earlier this year, Democratic leadership went into Thursday’s procedural vote knowing they would not get enough votes to overcome a filibuster to start consideration of “The Tax Relief for American Families and Workers Act of 2024.”
In a 48-44 vote, Senate Democrats did not meet the 60-vote threshold. The symbolic vote came six months after the House overwhelmingly passed it in a bipartisan vote.
Democrats, led in part by U.S. Rep. Rosa DeLauro, D-3rd District, have pushed for the full 2021 expansion of the child tax credit, but the bill had a much smaller boost. And with Congress unlikely to pass any kind of enhancements before the end of the year, the push to get more tax relief for families will pivot to states like Connecticut.
“We weren’t overly optimistic about the chances of success in this most recent effort,” said Lisa Tepper Bates, president and CEO of the United Way of Connecticut, whose group is pushing for a permanent, fully refundable state child tax credit. “It’s that much more important that we advocate at the state level for these proven measures.”
The $78 billion bipartisan compromise — negotiated by U.S. Sen. Ron Wyden, D-Ore., and U.S. Rep. Jason Smith, R-Mo. — included restoring a few tax deductions for businesses in exchange for a modest bump to the federal child tax credit.
DeLauro, who has been a years-long advocate of the child tax credit, was an outspoken critic of the legislation when it came up in the House earlier this year, arguing it leaned too heavily in favor of providing relief to corporations over low-income families. She wanted an enhanced child tax credit like the one passed under the American Rescue Plan, which expired at the end of 2021.
Aside from DeLauro, the rest of Connecticut’s representatives voted for the bill. And in Thursday’s vote, U.S. Sen. Richard Blumenthal, D-Conn., and U.S. Sen. Chris Murphy, D-Conn., voted to open debate on the bill. Every federal lawmaker in Connecticut has called for the full expansion of the child tax credit.
“We passed these tax cuts in the House with bipartisan support over six months ago to support working families and small businesses across the nation, but they are still left waiting for this critical relief,” U.S. Rep. John Larson, D-1st District, said in a statement with another member of the House Ways and Means Committee, U.S. Rep. Suzan DelBene, D-Wash. “Expanding the Child Tax Credit and restoring the research and development deduction will protect jobs, bolster technological innovation, and combat child poverty. It is time to stop these games once and for all and deliver the tax relief our constituents need.”
In a statement after Thursday’s vote, DeLauro said it was “encouraging” that a version of an expanded child tax credit got support from senators in both parties. But she reiterated her call to return to the 2021 expansion, pointing to the significant reduction in child poverty that year.
“We prioritized working- and middle-class families, not billionaires and the biggest corporations. And we provided a strong stimulus for American families and businesses, as every $1 spent on the Child Tax Credit generated $8 in economic benefits,” DeLauro said. “Simply put: it worked, and we must make it law once more.”
Under the proposal, families would have had a boost for the next few tax years. It sought to provide more help to families with lower incomes and multiple children, though those who make less than $2,500 a year would not be eligible. The highest earners would likely have not seen much of a difference in what they already receive.
The bill would have raised the refundable portion of the credit from $1,600 to $1,800, increasing by $100 a year until the 2025 tax year, as well as adjust it based on the rate of inflation. It would also have allowed low-income families to receive more for each child, instead of getting the same amount as someone with one child. And if families do not currently earn enough to qualify, they could use the prior year’s earnings to get the credit.
The current federal tax credit is back to $2,000 per child under age 17, though it is no longer fully refundable or given out as monthly payments like it was in 2021. And the full credit is not available for some families because they make too little and do not owe income tax. The people not receiving the entire benefit are disproportionately families of color.
The legislation would have also restored some deductions for businesses that expired in 2022. One of those would allow companies to get immediate tax deductions for domestic research and development instead of deducting it over the course of five years.
In a rare feat for the House with a slim GOP majority, the measure passed in January with a 357-70 vote. But as it made its way over to the Senate, opposition mounted from Republicans over enough work requirements for those who qualify for the child tax credit.
“The critical flaw with the bill is that it fails to provide meaningful tax relief to working families and instead goes too far toward the Democrats’ goal of turning the child tax credit into a subsidy untethered to work, which is fundamentally contrary to what the credit was created to do,” U.S. Sen. Mike Crapo, R-Idaho, said. Crapo was initially part of negotiations but rallied against the bill ahead of the vote.
While acknowledging they would not have the votes, Senate Majority Leader Chuck Schumer, D-N.Y., said it would help put lawmakers “on record” as a way of showing voters where they stand in the hopes of making progress on certain issues.
“Senate Republicans are looking at the calendar, and they have decided they care more about results of the election than in passing a law,” Schumer said this week. “They hope that if things go their way, they can get a more conservative package sometime in the future.”
An analysis of the bill said it would have helped one in five children under age 17 as well as lift 400,000 children out of poverty, according to the Center on Budget and Policy Priorities.
That same report estimated that 16 million children in low-income families would benefit in the first year if the bill is enacted. That includes families that currently do not qualify for the full tax credit or do not get one at all.
In Connecticut, that would have translated to more help for around 119,000 children. About half of those children who would have received a boost are Latino, and more than three quarters are children of color.
“When the proposal is fully in effect in 2025, it would lift some half a million or more children above the poverty line and make about 5 million more less poor,” the CBPP analysis reads.
But with little progress on the issue at the federal level, advocates are turning their attention to the states.
Connecticut was one of a number of states to offer its own assistance to low- and middle-income families. In 2022, the state provided a one-time rebate of $250 per child. More than 70% of eligible households claimed the tax credit.
Ahead of the 2025 General Assembly session, the United Way of Connecticut is circulating an online petition for a new credit and aiming to get more than 5,000 names by early January. They want one that is permanent and fully refundable so households with children who do not have a tax liability would still get the full amount.
Advocates are rallying behind a $600-per-child credit that would be up to $1,800 per household. It was a model pushed by state Comptroller Sean Scanlon when he was a state representative, and it included some income restrictions for more targeted relief for families with lower incomes.
Bates argued it is a high priority in Connecticut given the state’s need to fill open jobs and the role that working families play in the workforce. She added that such a credit gives them more room to help afford basic needs as well as loans for houses and cars.
“This is even more urgent in Connecticut,” Bates said, calling it a “uniquely high-impact way to provide that extra flexible income.”
The Connecticut Mirror/Connecticut Public Radio federal policy reporter position is made possible, in part, by funding from the Robert and Margaret Patricelli Family Foundation.
This story was originally published by the Connecticut Mirror.
