Democrats in the Senate are daring their GOP colleagues to vote against a $78 billion tax package that would expand the child tax credit and boost tax breaks for companies with large capital and domestic research expenditures. A procedural vote on the stalled bill, which passed the House in an overwhelmingly bipartisan vote in January but has faced crippling opposition from Senate Republicans, is expected this week, before senators are set to leave for a five-week summer break.
A Senate vote on the bill had been sought by incumbent Democrats facing competitive reelection races like Sens. Sherrod Brown (D-Ohio) and Jon Tester (D-Mont.). Democrats are crafting a message that they’re the party that cares about the middle class and families, while Republicans seek to enrich the wealthiest Americans and corporations. The vote also comes as Democrats have been attacking Republican vice presidential nominee JD Vance, a senator from Ohio, over comments critical of childless Americans. Senate Majority Leader Chuck Schumer (D-N.Y.) Tuesday said this is the chance for Vance and other Republicans to show they support families. Vance hasn’t yet voted in the Senate this week.
The vote is meant to “put pressure on Republicans to show where they stand on important issues like the child tax credit, affordable housing, and R&D,” Schumer said. A larger tax battle looms next year, when a swath of provisions from the 2017 tax law are set to expire and lawmakers will try to forge a much larger tax package.
GOP Criticism
Sixty senators would need to support the bill to move it forward—unlikely given the consistent GOP resistance. Republicans have opposed the child tax credit “lookback” provision in the bill, which allows filers to cite the previous year’s income to determine child tax credit eligibility. But the bill does have some support from members of the party’s more populist wing, such as Sens. Josh Hawley (R-Mo.) and Markwayne Mullin (R-Okla.), who said the child tax credit expansion was important for families.
“If we don’t do this, we’re going to own it,” Mullin said. He told reporters he was the lone voice in support of the bill at the Republicans’ Tuesday weekly lunch meeting. Nonetheless, Republicans said they were unconcerned that one vote would turn the tide in an election.
National Republican Senatorial Committee Chair Steve Daines (R-Mont.) called it nothing more than a show vote Tuesday. “Folks see through it,” he said. Though most Democrats have said they’d vote for the bill, some of the most progressive members of the Senate, such as Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), are uncommitted. Centrist Sen. Joe Manchin (I-W.Va.) said he’d like to see changes because the CTC provisions weren’t generous for the lowest-income families. Sen. Chris Murphy (D-Conn.) said he hadn’t yet made a decision on how to vote.
Looking Ahead
Business lobbyists, who’ve been pushing for passage of the tax bill all year, are holding out hope. A vote this week, even if it fails, could facilitate conversations during the lame-duck session on how to move forward, if there is divided government following the November election, said Arshi Siddiqui, a tax lobbyist at Akin Gump and former aide to former House Speaker Nancy Pelosi (D-Calif.). “This is a way to put this package back in the spotlight and see where you go from there,” she said.
The legislation would retroactively renew a trio of tax breaks for research and development, interest, and capital expenses, which would help manufacturing and technology companies, among others. “Due to the expiration of key tax provisions in 2022 and 2023, manufacturers across America have seen the cost of equipment purchases and R&D investments increase, inhibiting their ability to create jobs, raise wages and invest in communities across the country,” said Charles Crain, the vice president of domestic policy at the National Association of Manufacturers, which has heavily lobbied on the legislation.
Retroactive renewal of the business breaks gets harder to pass in a lame-duck session and likely would not happen in 2025, said Rohit Kumar, a former aide to Senate Minority Leader Mitch McConnell (R-Ky.) now at PricewaterhouseCoopers. The best hope for the business breaks, Kumar said, would be if the vote this week spurs senators to come together on a compromise that can clear the Senate. Renewing the tax breaks now and setting them to expire at the end of 2025 may boost efforts to extend them next year, he said.
“If we get to 2025 and these things have been expired for several years, that’s not saying it’s impossible to get a seat at the table, but you’ve got to fight,” Kumar said. “You’ll sort of politically get de-prioritized to some degree if you’re something that’s not imminently about to expire.”
