Advocates hopeful about getting expanded child tax credit over lame-duck finish line

Advocates say they’re making inroads with Republican senators on a beefed-up version of the child tax credit (CTC), which has become a top priority for Democrats during the lame-duck session.

Tax negotiations have been heating up as lawmakers try to strike a deal on a year-end spending deal, with Democrats pushing for the CTC as well as an earned income tax credit for working families and Republicans arguing for a set of tax credits favorable to businesses.

“Senator [Bill] Cassidy and Senator [Shelley] Moore Capito both have openness to something,” Adam Ruben, campaigns director of the progressive advocacy group Economic Security Project, said on the sidelines of a rally for the CTC held outside the Capitol on Wednesday, referring to the senior senator from Louisiana and the junior senator from West Virginia, both Republicans.

“We think there’s openness from [Lisa] Murkowski and [Susan] Collins as well,” Ruben said of the Alaska and Maine senators, adding that his organization has talked to six Republican congressional offices in the last week and a half. He also mentioned Republican Sens. Mitt Romney (Utah), Richard Burr (N.C.) and Steve Daines (Mont.), who co-sponsored their own version of a CTC earlier this year. 

“The numbers add up,” Ruben said.

“We think that there’s a sense from a number of Republicans that in the wake of the Dobbs decision, they want to do something that’s more visibly pro-family and they feel like the child tax credit is a way to get that done,” Ruben added, referring to a Supreme Court ruling earlier in the year that took away the federal right to an abortion.

Democrats are pitching an exchange between an expanded CTC and a business tax credit for research and development (R&D) costs favored by Republicans. But Republicans have raised eyebrows about such a quid pro quo since Democrats have supported the research credit themselves in the past.

One Republican aide on the tax-writing House Ways and Means Committee called such a proposal “confusing.”

“We’re willing to talk,” Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said Wednesday. “I mean, the deal’s on the table. We’ll do R&D for CTC, they can come back with something and start negotiating.”

Sen. Cory Booker (D-N.J.) suggested Democrats would be open to considering other credits in addition to the write-off for research and development.

“We’re going to use every leverage point we have,” he said. “This is the No. 1 thing we’re fighting for.”

Other tax credits that could sweeten the deal for Republicans include the deductibility of interest costs and a renewed rule that allows capital expenditures like machinery costs to be written off in the year that they’re purchased as opposed to over a period of years.

“Some Republicans think the Democrats will just vote for [the R&D credit] anyway, so they should just do it next year,” Ruben said. “But I just don’t see what the pathway is very clearly for them, because next year is going to be mostly gridlock.”

House Minority Leader Kevin McCarthy (R-Calif.) is “struggling to round up the votes for his Speakership, and I want to entrust tens of billions of dollars in tax breaks to a very closely divided House along with a Senate from the other party? Even if there is support in both parties, that’s not an easy path,” he added.

Other advocates said this week that legislators should not be considering any tax breaks for corporations at the moment but should instead be figuring out ways to raise taxes on private enterprises.

In a letter signed Tuesday, members of 58 organizations including Oxfam America and the Teamsters urged Congress “to oppose the inclusion of corporate tax breaks in any lame-duck legislative package.” 

“At a time when corporations are making record-high profits while paying record-low taxes as a share of the economy, and when corporate price gouging is helping to fuel inflation, corporations should start paying more of their fair share, not less,” they wrote.

Specifically, the groups objected to business credits on bonus depreciation, the net interest tax deduction and the research and experimentation tax credit.

The U.S. Chamber of Commerce told The Hill Tuesday that these credits were their top three legislative priorities for the end of the year.