Bipartisan Vote Approves $78 Billion Tax Relief Bill for Families and Businesses in the US House

The US House of Representatives has sanctioned a bipartisan tax relief package worth $78 billion favoring businesses and low-income families. Despite the persistent gridlock on various pivotal fiscal matters, this legislation saw an overwhelming House support on Wednesday.

The provisional tax-solution received a robust 357-70 bipartisan vote, signalling approval of increased Child Tax Credit and the re-implementation of income deductions on business R&D and certain capital investments up until 2025. This display of cooperation between Republicans and Democrats was unusual amidst a prevailing deadlock over funding for the government, including financial aid for Ukraine and Israel. The deadlock is primarily due to the Republicans' call for increased security at the southern US border.

Despite certain objections by a few Republicans arguing over the absence of tax relief for state and local taxes (SALT), the measure was greenlit by House Speaker Mike Johnson. He has agreed to persist in the engagements with colleagues and House Ways and Means Committee Chairman Jason Smith to explore a possible path forward regarding the SALT-related legislation, as per Johnson’s spokesperson Athina Lawson.

The approved package faced certain pushback during discussions, particularly from hardline conservative Republicans, because child tax credit claimants can receive cash payments amounting up to $2,100 per child by 2025 (costing $33.5 billion). Republican Representative Matt Gaetz decried the measure as a veiled welfare bill benefiting corporations and failing to address poverty sufficiently. Parallel sentiments were expressed by Progressive Democrat Representative Rosa DeLauro.

Despite certain criticisms over the lack of relief for state and local taxes and mortgage interest, Jason Smith endorsed the business advantages of bringing back immediate deductions, which expired in 2022. He highlighted that the provisions of the bill, estimated to cost $34.3 billion over a decade, could inspire upwards of $470 billion in new R&D and small business capital investment, creating over 900,000 jobs. Additionally, the bill would abolish double taxation for businesses and workers operating in the US and Taiwan, including semiconductor manufacturers building factories in the US.

The tax relief package has been considered crucial bipartisan legislation promoting conservative pro-growth tax reform by Mike Johnson. The 2017 Republican-backed tax-cut legislation has capped individual deductions for mortgage interest and SALT payments in favour of business tax cuts. Consequently, despite lower tax rates, lawmakers in New York and California are seeking to abolish these caps due to resulting higher overall tax bills for taxpayers.