With just days to go, lawmakers announced a deal earlier this week to fix the state’s electricity bill and what may be the last major bill for 2022.
But there’s a lot of good news that needs to be changed, especially when it comes to tax reform that Congress has been debating in recent months.
Republican lawmakers are proposing changes to the corporate tax rate, while some Democrats are considering reinstating the Child Tax Credit. It is not known whether people will pay taxes before the Christmas holidays.
For his part, Senate Majority Leader Chuck Schumer (D-NY) praised the agreement on Wednesday as a “way” to finish the work of Congress this year, but added that “we still have a long way to go.”
Even Republicans like Sen. Richard Shelby (R-AL) is on board, the deal must be vetoed by Rep. Kevin McCarthy (R-CA). McCarthy, in the midst of a battle to become the next Speaker of the House when Democrats take power in 2023, also called a press conference on Wednesday to criticize the deal.
His case, as McCarthy said in an interview with Fox Business this week, is that “the best option for America” is to wait and “let the new Congress deal with this in January.”
Trump’s business tax cuts are just around the corner
One important area of contention is business taxes.
In 2017, President Trump signed the Tax Cuts and Jobs Act, which includes many tax cuts that businesses pay when they buy new equipment or invest in research and development.
The Tax Foundation recently outlined the risks, noting that “structural challenges are on the table” stemming from the recent debt crisis including Trump’s tax cuts and the end of other programs such as the American Rescue Plan. What they all have is an expiration date of 2023 unless lawmakers act.
Congress has been unable to pass a similar “tax increase” resolution by the end of 2021, adding urgency to this month’s negotiations.
Opponents say not taking action on the trade deal will hurt the economy and could also make it impossible for companies to rebuild their businesses in 2023. Rep. Kevin Brady (R-TX), the Republican chairman of the House Ways and Means committee, recently foresaw this. The GOP is attacking if the talks stall, saying inaction would hurt the economy if “President Biden’s tax hikes go through.”
But in a recent CNBC interview, Brady added hope that “we will have time to do this.”
Child Tax Credit
While Republicans are focused on business issues, Democrats are still hoping for tax reform when it comes to what families pay.
During the pandemic, the Child Tax Credit (CTC) was boosted to help families, but the extended credit ended in early 2022 and reverted back to pre-pandemic levels. Since then, Democrats have been pushing to revive the 2023 debt extension that looks like an uphill climb.
What the Democrats are working on is a deal where the expanded CTC is traded on the corporate tax base that Republicans are focused on.
In an event on Tuesday with Punchbowl News, Sen. Ron Wyden (D-OR) said he supports some of the trade provisions but “I also feel very strongly about the Child Tax Credit and I think it’s a 1-2 opportunity that will help America.”
But Republicans, as well as some independent Democrats, don’t want to expand the Child Tax Credit and Wyden wouldn’t say at Tuesday’s event whether a deal to increase taxes would be possible without them.
More problems to solve
Lawmakers have other issues to complete before they return home for Christmas. Schumer seemed optimistic Wednesday that this could be resolved. He predicts that the final bill will be “a good solution because it will have the achievements that both parties want to see, such as the Electoral Count Act and funds for our friends in Ukraine.”
The Electoral Count Act clarifies provisions of the 1887 Electoral Count Act to ensure that the Vice President cannot interfere in the counting of votes, which then-President Trump said was possible during the January 6 riots.
Lawmakers plan to send $38 billion in new aid to President Volodymyr Zelenskyy and the Ukrainian government as the country continues its war with Russia. The move comes before House Republicans — who are reluctant to agree to new aid — are looking into it.
Another business is delaying the long-awaited overhaul of the retirement system but some are beginning to worry that the narrow window for the bill, known as the SECURE Act 2.0, is closing quickly.
Meanwhile, Senate Republican leader Mitch McConnell (R-KY) tried to draw a line in the sand to end the deadline, saying on Wednesday that “the Senate has until December 22 to finish all the bills” or pass another stoppage, ensuring that they want going home on vacation.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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