In a bipartisan vote, the Ways and Means Committee approved legislation to help American job creators stay competitive, allow Main Street businesses to survive and grow, and give tax relief to working families struggling under the weight of elevated prices and interest rates. The Tax Relief for American Families and Workers Act also accelerates the end of the COVID-era Employee Retention Tax Credit (ERTC), a program rife with fraud and cost overruns, that will save taxpayers over $70 billion.
The legislation restores and expands proven tax policies from the 2017 GOP tax reform that supported hardworking American families and made the economy more successful and productive, grew workers’ wages, and spurred job creation and greater investment in America. Communities hit hard by natural disasters will get much-needed tax relief, while small businesses will be able to immediately expense the cost of equipment and tools needed to grow and create new jobs. After more than three years of high prices squeezing Americans’ pocketbooks to the breaking point, families will get relief in the form of a Child Tax Credit that rewards work.
Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement after the Committee’s bipartisan vote to advance the legislation for consideration by the full House of Representatives:
“Today’s strong bipartisan vote in the Ways and Means Committee shows there is a path forward for Republicans and Democrats to come together and deliver tax relief for workers, families, farmers, and small businesses. The Tax Relief for American Families and Workers Act will help America compete and win against countries like China, encourage small businesses to grow and invest in American jobs and opportunity, and save taxpayer dollars by ending a COVID-era policy that has become the poster child for fraud. This tax relief package builds on the success of the 2017 Tax Cuts and Jobs Act which produced a proven track record of delivering for families, reducing poverty and unemployment, and attracting more economic investment in communities across America.
“The Ways and Means Committee spent the past year traveling the country hearing first-hand from Americans about the challenges facing their communities as well as the policies – like those included in the Tax Relief for American Families and Workers Act – that are desperately needed to support a healthier economy and cultivate greater opportunity. This bipartisan bill shows Congress has listened and is responding to their concerns. I look forward to the House and Senate passing this legislation to help working families and Main Street businesses thrive.”
For the section-by-section, click here.
Expands Innovation and Competitiveness with Pro-Growth Economic Policies
- Research & Development (R&D) expensing so businesses of all sizes can immediately deduct the cost of their U.S.-based R&D investments instead of over five years – encouraging American innovation and improving our competitive position versus China and the rest of the world.
- Interest deductibility: continued flexibility for businesses forced to borrow at higher interest rates to meet their payroll obligations and expand their operations.
- 100 percent expensing: restore full and immediate expensing for investments in machines, equipment, and vehicles.
- Taiwan double tax relief: strengthen America’s competitive position with China by removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan.
Builds Up Main Street and Rebuilds Communities Struck by Disasters
- Expand small business expensing cap: increase the amount of investment that a small business can immediately write off to $1.29 million, an increase above the $1 million cap enacted in 2017.
- Cut red tape for small business: adjust the reporting threshold for businesses that use subcontract labor from $600 to $1,000 and index for inflation – the first update to the threshold since the 1950s.
- Help families get back on their feet with disaster tax relief covering recent hurricanes, flooding, wildfires, and the Ohio rail disaster.
Supports Working Families with an Enhanced Child Tax Credit
- Expand access to child tax credit: phased increase to the refundable portion of the child tax credit for 2023, 2024, and 2025.
- Eliminate penalty for larger families: ensure the child tax credit phase-in applies fairly to families with multiple children.
- One-year income lookback: flexibility for taxpayers to use either current- or prior-year income to calculate the child tax credit in 2024 or 2025, similar to bipartisan action taken six times in the past 15 years.
- Inflation relief: adjust the tax credit for inflation starting in 2024.
Eliminates Fraud and Waste by Ending the Employee Retention Tax Credit Program
- Saving over $70 billion in taxpayer dollars by accelerating the deadline for filing backdated claims to January 31, 2024, under the COVID-era employee retention tax credit – a program hit by major cost overruns and fraud.
Increases supply of low-income housing by enhancing the Low-Income Housing Tax Credit, a public-private partnership with a proven track record, with increased state allocations and a reduced tax-exempt bond financing requirement.
Now, we'll see if it gets through the entire House and then the Senate.