House Speaker Mike Johnson is set to introduce a $78 billion bipartisan tax package on the House floor, following extensive negotiations that extended into the night with a group of New York Republicans. The negotiations revolved around concerns from these Republicans regarding the absence of state and local tax relief in the proposed deal.
The tax package, named the “Tax Relief for American Families and Workers Act,” is being presented as crucial bipartisan legislation aimed at revitalizing conservative, pro-growth tax reform.
Johnson, a Republican from Louisiana, emphasized the significance of the bill, stating that it also terminates a wasteful COVID-era program, potentially saving taxpayers tens of billions of dollars.
The proposed legislation encompasses various provisions, including the expansion of the Child Tax Credit for numerous families, the reinstatement of three business tax breaks, tax relief for victims of major federal disasters, and a reduction in tax burdens for companies operating in the U.S. and Taiwan.
The funding for these measures would come from a crackdown on the Employee Retention Credit, a COVID relief program that has faced issues of fraud.
To pass, the vote on the tax package would require a two-thirds majority under a suspension of the rules. This necessitates strong support from both Democrats and Republicans. Johnson expressed his optimism about the bill, emphasizing its importance in providing relief and reforms.
The development follows a dramatic 24-hour period during which four New York Republicans initially voted against House floor action on unrelated legislation. Their objection stemmed from dissatisfaction with the tax deal’s limited provisions for state and local tax relief.
However, after discussions with Speaker Johnson, the four GOP members reversed their votes, allowing floor action to proceed.
Speaker Johnson engaged in prolonged discussions through the night with House Ways and Means Chair Jason Smith and the four New York members to resolve the impasse.
The tax package being considered by the House remains unchanged from the version approved by the Ways and Means Committee on January 19.
An aide from the House leadership revealed that Speaker Johnson is committed to finding a resolution with the New York Republicans, potentially leading to a separate bill addressing state and local tax relief going through the regular legislative process.
While some Democrats have voiced concerns about the child credit expansion not being generous enough, it is expected that their opposition will not hinder the bill’s passage. The legislation would then move to the Senate, where its fate remains uncertain.
In a House leadership meeting, Democrats engaged in a spirited debate on the tax package, discussing concerns about its concessions to corporations. Despite the debate, many Democratic moderates seem inclined to support the deal.
While moderate Republicans have expressed support, some House Freedom Caucus members have raised concerns about the child credit allowing undocumented immigrants with U.S.-born children to receive tax refunds. Additionally, opposition exists to increasing the “refundability” of the credit under the deal.
Efforts to bring the tax package to the House floor faced obstacles, including a resolution circulated by Rep. Tom McClintock to block the deal, which has since been retracted. In the Senate, Republicans have indicated a desire for their own markup of the bill.
Senate Majority Leader Chuck Schumer and the White House have expressed support for the legislation, and if passed, it could signal a rare bipartisan achievement in tax policy, according to Senate Finance Chair Ron Wyden.