Activists gather outside Chamber of Commerce to push for child tax credit

Demonstrators voiced support on Tuesday for tax credits geared toward low- and middle-income families outside the Chamber of Commerce in Washington, where they hoped to draw a stark contrast between tax cuts for businesses that are also being considered by lawmakers working on a year-end spending package.

The split over what tax credits should be included in the package doesn’t break down exactly along party lines, but Democrats are generally arguing for an expanded child tax credit (CTC) and an earned income tax credit geared toward individuals and families, while Republicans are pushing for tax breaks for businesses that include write-offs for equipment and research.

However, the battle over tax cuts isn’t a zero-sum game, and some combination of the measures preferred by Republicans and those favored by Democrats could be in the final deal. They could also be left out altogether.

“Research and development tax credits for corporations are on the agenda. The child tax credit is not at the same level. We’re saying that it should be at least at the same level of priority, and that there shouldn’t be corporate tax cuts without the CTC,” Dorian Warren, one of the organizers of the demonstration, said in an interview.

“We’re saying yes — it can be both. It doesn’t have to be mutually exclusive,” he said.

Jessica Margeson, a New Hampshire resident who attended the demonstration and received expanded child tax credit payments in 2021, said that beefing up the tax credit again would make a big difference in her life.

“Last week, someone gifted me $200 in groceries, because after my bills I had nothing left for food, literally nothing left. So it would mean being able to fill my fridge and being able to meet the increased price of electricity. It would mean not being scared of eviction,” she said in an interview.

Of all the tax breaks under consideration, Democratic lawmakers say their top priority is an expansion of the CTC, which was raised to $3,600 per child as part of a pandemic relief package in 2021 and reduced child poverty in the U.S. by 26 percent, according to a study by Columbia University.

“The first priority for Democrats is the child tax credit,” Sen. Sherrod Brown (D-Ohio) told reporters Tuesday. Asked whether Democrats were attempting to trade an expanded CTC for research and development write-off, Brown responded, “That’s what we’re trying.”

“We are willing to do some corporate tax stuff that I’m not all that enamored of in order to get the child tax credit,” he added.

The top business tax breaks for the Chamber of Commerce pertain to research and development costs, the deductibility of interest, and bonus depreciation.

These cuts would allow “businesses to once again write off the full cost of research in the year the expenses are incurred, [extend] more generous ‘bonus depreciation’ of capital equipment, and [allow] more liberal rules for firms to deduct interest costs,” according to an analysis by Howard Gleckman of the Urban-Brookings Tax Policy Center.

The “bottom line” is that “Congress should not make a bad situation worse by allowing the tax code to penalize businesses that want to invest in the U.S. economy. We call on Congress to come together in support of the American economy and seize this opportunity to ensure a brighter, more prosperous 2023,” Rachel Ledbetter, a senior manager with the Chamber of Commerce, wrote in a statement to The Hill.

Warren said that resistance to expanded tax credits for low- and middle-income people follows the example set by Social Security and other benefit programs that become entrenched within the expectations of voters and difficult to modify afterward.

“It’s like Social Security. I think that’s the fear, that like Social Security it will get lodged and create new constituencies who are prepared to fight for it. I think that is probably one of the fears from the opposition on this, absolutely,” he said. 

“People are going to fight for it. Even if it doesn’t happen now, they’ll be watching next year with a divided government, and they’ll be watching in 2024. It’s not going to go away — because their expectations have been raised. And that’s because of their actual experience with the policy,” Warren said.