The Tax Relief for American Families and Workers Act (H.R. 7024), introduced by Rep. Jason Smith  (R-Mo.), passed the House with overwhelming support  Jan. 31. 

The act increases the child tax credit and offers several business-friendly tax cuts and tax relief for disaster-impacted communities. The act would increase the maximum refundable tax  child care credit from $1,600 in 2023 to $2,000 in 2025,  with inflation adjustment for future years.  

The Senate Committee on Finance wrote that by expanding the child tax credit, the bill will help 16 million  kids from low-income families and lift 500,000 out of  poverty. 

The act also would restore immediate full deductions  for businesses for the purchase of new equipment and  machinery and domestic research and development. The tax breaks had lapsed as a cost-containment measure  under a 2017 Republican tax bill. 

Despite its proposed benefits, the act failed in the  Senate Aug. 1 because a large majority of Senate Re publicans opposed it, arguing they could get a better  deal in 2025. Sens. Josh Hawley (R-Mo.), Markwayne  Mullin (R-Okla.) and Rick Scott (R-Fla.) were the only  Republican senators who joined Democrats in voting for  the bill. 

Because people can receive the money from a  refundable tax credit even if they don’t owe any taxes,  Senate Minority Leader Mitch McConnell (R-Ky.) said  the changes amounted to “cash welfare instead of relief  for working taxpayers.” 

Senate Majority Leader Chuck Schumer (D-N.Y.)  did not bring the bill to the floor for months because it  did not have the political support to proceed.  

Schumer brought it forward in August — during  election season — to spotlight the issue and, in particular,  get the vote of Sen. J.D. Vance (R-Ohio) on record after  the vice presidential candidate claimed Kamala Harris  was calling for the end of the child tax credit.  

In truth, the Biden administration bolstered the child  tax credit during the pandemic and attempted to have  that change made permanent later.  Vance was not present for the vote. 

Sen. John Cornyn (R-Texas) called the vote a “show  vote” meant to provide Democrats “with a talking point  or two on the campaign trail.” Others said they were not worried about being on  record opposing the bill.  

“There are certain issues that voters instinctively  know that Republicans are better on,” Sen. John Thune  (R-S.D.) 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,” Thune said.  

(The 2017 tax bill lowered income tax rates, raised  the standard deduction for individuals and lowered the  corporate tax rate to 21%, among other changes.) 

The Heritage Foundation, a conservative think tank,  also opposes H.R. 7024, writing that 91.5% of the family  benefits are “cash welfare” — meaning that most of the  changes would affect refundable tax credits rather than  nonrefundable ones — and would add $155 billion to  the federal deficit.  

The Heritage Foundation said that, when combined  with other welfare programs, the tax credit expands the  welfare system excessively and weakens work requirement.  

Republican House members, on the other hand,  largely supported the bill. “So many people are struggling with the rising cost of living, and this bill will  help create jobs and support middle-class families,” Rep.  David Valadao (R-Calif.) said in a statement. 

The Leadership Conference on Civil and Human  Rights also wrote in support of the bill. The organization said the bill would “help millions of families afford  essentials like food, rent, and child care.”  

The group said that child tax credits reduce child  poverty without “meaningfully reducing workforce participation” and help address the poverty gap for Black  and Latino children.  

The Center on Budget and Policy Priorities, a liberal  think tank, emphasized the importance of a “look-back”  provision that would allow families to use their previous  year’s income to calculate their tax cut if their income  falls temporarily, creating a financial buffer in an already-difficult financial year.  

“Parents who work in low-paid jobs are often in a  precarious position,” the group noted in a statement.  “Nearly half of individuals with low earnings (below the  25th percentile) lack even a single day of sick leave, and most have no access to paid family or medical leave.”