WASHINGTON — A bill to expand the child tax credit and restore some tax breaks for businesses failed to advance in the Senate on Thursday as Republicans largely opposed the measure, arguing they would be in position to get a better deal next year. Majority Leader Charles Schumer, D-N.Y., dared Republicans to vote against the tax cut package before lawmakers headed home for the month. He said they would be voting against tax cuts for many low-income families and local businesses.
The legislation fell far short of the 60 votes needed to advance the measure, with a vote of 48 in favor and 44 opposed. Three Republicans — Sens. Josh Hawley of Missouri, Markwayne Mullin of Oklahoma and Rick Scott of Florida — joined with Democrats in support. Sens. Joe Manchin of West Virginia and Bernie Sanders of Vermont, independents who caucus with Democrats, were opposed. Both of Arkansas’ Republican senators, John Boozman and Tom Cotton, opposed the legislation.
Both parties are trying to spotlight issues they believe will play well with voters in November. Schumer put the onus on Republicans to block tax cuts that were sought by the business community and that would financially help an estimated 16 million families when fully in effect. He was also looking to counter assertions from Republican presidential nominee Donald Trump’s running mate, Sen. JD Vance of Ohio, that Democrats are “anti-family.”
“The question is, will Senate Republicans join us to give Americans a tax break or will they stand in the way?” Schumer said before the vote.
The Proposed Changes
The bill was fashioned through negotiations by Rep. Jason Smith, R-Mo., chairman of the House Ways and Means Committee, and Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee. It would restore full, immediate deductions that businesses can take for the purchase of new equipment and machinery, and for domestic research and development expenses. The tax breaks had lapsed as a cost-containment measure under provisions of the 2017 tax bill that Republicans approved under the Trump administration.
Under the bill, low-income families could have claimed the child tax credit for multiple children; current law only counts it for one child for the lowest-earning families. Starting in 2025, the benefit would have been linked to inflation, which would add up to a roughly $100 jump. The Internal Revenue Service says it could have applied the changes retroactively to taxes filed in April if the measure becomes law.
Nonpartisan estimates say it would lift 400,000 children out of poverty. A previous, more generous Biden-era expansion of the credit kept 3 million children out of poverty, according to research conducted by Columbia University’s Center on Poverty and Social Policy. The expansion expired at the end of 2021, and child poverty spiked immediately afterward.
Business groups in Washington have also rallied around the corporate tax provisions. Officials say limiting deductions on research and development have restrained spending on product innovations that could bring down consumer costs. Without them, industry leaders say, small businesses could struggle to afford investments such as new equipment and larger payrolls. That policy remains a GOP priority in a 2025 tax bill, lawmakers say.
The bill would be paid for by speeding up the cutoff date by which companies could submit retroactive claims for employees they kept on the payrolls during the covid-19 pandemic. The IRS has said a significant majority of retroactive claims are at a high risk of fraud.
Despite the proposal’s compromises between Smith and Wyden, it had lost momentum in the Senate months ago after Sen. Mike Crapo, R-Idaho, in line to chair the Senate Finance Committee if Republicans win control of the chamber, announced his opposition.
“I expect most Republican senators are going to stick together and back Crapo. We can get a much better deal if we wait. We’re going to get one shot at this, and to waste that shot on this bill — in my judgment — would be foolhardy,” Sen. John Kennedy, R-La., told The Washington Post.
Crapo exited negotiations over the legislation months ago over concerns that the bill did not have sufficient work requirements for child tax credit recipients. Other Republicans opposed a provision that allowed undocumented immigrants who are parents of U.S. citizen children to receive the 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,” Crapo said on the Senate floor.
Wyden shot back at Republicans moments later in floor remarks: “What are sure to be their plans for the future? Lock in even more handouts to big corporations and the wealthy.”
Election Season
With the bill seemingly lacking the support necessary to overcome procedural hurdles, Schumer had opted for months not to bring it up for a vote. But the election season presented an opportunity for Democrats to spotlight the issue — and Vance. Schumer even referenced “the junior senator from Ohio” when speaking on the Senate floor, leaving no doubt that Vance was part of their thinking in holding the vote.
Vance claimed in a Fox News interview that Vice President Kamala Harris, the leading candidate now to be the Democrats’ White House nominee, was calling for an end to the child tax credit. But the Biden administration led the effort to bolster the child tax credit during the pandemic and tried unsuccessfully to continue the expansion, which temporarily increased the credit to $3,000 a year, added 17-year-olds and boosted the amount to $3,600 for children under age 6.
Schumer called Vance’s claim “plain old nonsense” and said the 2021 expansion was one of the most significant achievements Democrats have had under the Biden-Harris administration.
Vance also suggested in 2021 that political leaders who did not have biological children “don’t really have a direct stake” in the country. He reaffirmed those remarks after clips of them resurfaced, saying this week on the SiriusXM radio program “The Megyn Kelly Show” that the Democratic Party had become “anti-family and anti-child.”
Vance was in Arizona visiting the U.S.-Mexico border Thursday and did not attend the vote. His office did not reply to a question of how he would have voted.
Harris has backed President Joe Biden’s plan to preserve the 2017 law’s individual tax cuts while increasing rates on businesses and people earning more than $400,000.
Trump has vowed to preserve individual tax cuts and also potentially lower corporate taxes from 21% to as low as 15%.
“If the argument is, ‘We can get a better deal later,’ that’s if we win the Senate, if we win the House, and if we win the White House — if that’s the argument for not doing it, then why can’t, if those ifs come true, we do a better tax bill?” Mullin said before the vote. “I like the sure thing.”
Wyden, meanwhile, said: “There’s always a lot of talk among Republicans about supporting families, competing with China, and cracking down on fraud in government programs, but they just rejected a bill that would accomplish all of that in one package.”
Democratic Sens. Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both in competitive races this fall, spoke on the Senate floor in support of the bill. But Sen. John Cornyn, R-Texas, called Thursday’s action the latest in a series of “show votes” that were designed to fail but would provide Democrats “with a talking point or two on the campaign trail.”
South Dakota Sen. John Thune, the second-ranking Senate Republican, said there are good things in the legislation, but “if we’re in a position to do this next year, it will be a much stronger bill.”
Thune said it won’t be hard for Republicans to rebuff criticism that they were insufficiently supportive of tax relief for businesses and families.
“There are certain issues that voters instinctively know that Republicans are better on,” Thune said. “They may try to make that argument in a political ad, but I think it’ll be hard to sustain when most voters know that it was the Republicans in 2017 that cut taxes and that next year it will be Republicans who extend those tax cuts if we have the majority.”
