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An Update for the Taxpayers: Last-minute Changes in Procession by the Congress

A bicameral group of lawmakers have planned to restore and update tax payments according to The Washington Post’s report on Jan 4.

The group includes Senate Finance Committee Chair Ron Wyden and House Ways and Means Committee Chair Jason Smith. The two are currently negotiating for a $100 billion bill. It includes the restoration of the 2017 tax cut laws signed by former President Donald Trump and the expansion of the Child Tax Credit in Unison with Joe Biden’s American Rescue Plan.

What are the two laws?

President Donald Trump signed the Tax Cut and Jobs Act into law back in 2017 which majorly changed the scenario of tax payment. This law reduces business tax from 35% to 21%. It became a significant change in tax cuts in 3 decades.

The Child Tax Credit is a tax benefit for American taxpayers who have children below the age of 17 under the current President Joe Biden. It was granted by Biden’s American Plan, giving $3,000 per child to families with kids over the age of six and $3600 to those with children under six. It was a success as it fed 2 million children, keeping 3 million out of poverty in just the first month of its issue.

The bill is a unified decision from the two parties after the 2023 budget proposal requested to restore the ARP credit due to its expiration by the Republicans’ opposition in 2021.

The lawmakers are satisfied by the productive discussion, and working on the goal for the upcoming season, hoping it will get passed by the end of January for an update on the tax payment.

The benefit of the Bill

According to the bill, it would benefit both the business sector as well as families. Trump’s 2017 tax law included a cut in the R&D (research and development) deduction for businesses, but it expired in 2022. The proposal is to revive the law so that it benefits the businesses and by Biden’s ARP credit to help lower child poverty and help families in need of child support.

The bill is also a political strategy for the 2024 elections. By reviving the CTC, the problem of child poverty will be solved, it would also boost Democrat’s support for the elections. Whereas the revival of the Tax Cut law would benefit the Republicans in building trust among the business community.

By working on the bill in unanimity, the two parties have focused on a single chapter, the Republicans’ willingness to work for the betterment of children and the Democrat’s acknowledging and supporting businesses, both being important aspects as key voters.

The Tax Fight, 2025

The bill is also a priority check for both parties regarding the upcoming tax fight in 2025. As Trump’s tax cut law is expiring in 2025, it would significantly add to the debt of two decades, which has affected the nation’s revenue. The next president will have to work out with Congress to provide a solution which would notably affect the individual taxpayers rather than the businesses in 2025.

Joe Biden believes that if big corporations are given the benefit of the tax cuts, so should the families with children, as mentioned in a statement by White House press secretary Karine Jean-Pierre on Jan 4. The bill has been proposed in Congress and the lawmakers are waiting for the final decision.

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