Senate Fails to Advance Child Tax Credit Expansion

Senate Majority Leader Chuck Schumer (D-N.Y.) speaks during a news conference at the U.S. Capitol on Aug. 1, 2024. Kent Nishimura/Getty Images

The U.S. Senate failed on Aug. 1 to advance a bipartisan deal to expand the Child Tax Credit after most Republicans voted against it.

The Tax Relief for Working Families and Americans Act was unveiled in January by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.) as a compromise bill to expand the Child Tax Credit. The bill would make the $2,000 credit fully refundable by 2025, adjust it for inflation, and allow parents to claim separate credits for each child, as opposed to a single credit regardless of the number of children.

The bill passed in the House on Jan. 31 in a large bipartisan vote of 357–70 yet failed to advance in the Senate after Republicans objected to several provisions.

By a vote of 48–44, the bill failed to reach the 60-vote “cloture” threshold to limit debate and advance to final passage.

Three Republicans—Sens. Markwayne Mullin (R-Okla.), Rick Scott (R-Fla.), and Josh Hawley (R-Mo.)—joined most Democrats voting in favor, while Sens. Joe Manchin (I-W.Va.) and Bernie Sanders (I-Vt.) voted against the bill.

Senate Majority Leader Chuck Schumer (D-N.Y.), who supported the bill and voted in favor, switched his vote to “no” for procedural reasons in order to move to reconsider the bill at a later date.

“It will not get 60 votes. ... [It was] a show vote only. It was one to have something to talk about before the election,” Senate Finance Committee ranking Republican member Mike Rounds (R-S.D.), who led GOP opposition to the bill, told The Epoch Times ahead of the vote.

Apart from expanding the Child Tax Credit, the bill would have restored a tax credit for affordable housing, enacted new tax deductions for businesses, authorized a double-taxation avoidance agreement between the United States and Taiwan, and imposed new measures to address business tax fraud during the COVID-19 pandemic. It would have also exempted certain disaster relief payments from income tax, such as those made to victims of wildfires and the toxic train derailment in East Palestine, Ohio, in 2023.

Negotiations

Republicans had requested changes to the bill, such as the removal of a “lookback” provision that would allow taxpayers to claim the credit based on a prior year’s income, even if they made no income in the current year. They said it would disincentivize people from working.

“Allowing individuals to receive a refundable credit when they have zero annual earnings—as the prior year’s earnings provision allows—is a departure from longstanding policy,” Rounds wrote in an earlier statement.

Many activist groups and some Republican senators pushed back on the claims about the lookback provision.

“I’ve heard a lot of fussing from my colleagues about all this. ... I think if you dig into details ... that’s not accurate,” Hawley told The Epoch Times. “[The bill is] not perfect, but I’m going to vote for it.”

Joe Hughes, a senior analyst at the Institute on Taxation and Economic Policy, told The Epoch Times in a written statement: “They do not want to hand the president what would widely be seen as a victory this close to the election. I do not think removing the lookback provision would improve the odds of the bill passing the Senate.”

A report in January by Congress’s Joint Committee on Taxation found that expanding the Child Tax Credit would increase labor supply but that the increase was “too small to be significant.”

Wyden had said that he would remove the provision from the bill, although Republican opposition persisted.

“The Senate Republican leadership has basically said, ‘We’re interested in doing this in 2025 because we believe that we will be in the majority,’ and they basically want to give the tax breaks to their business buddies and maybe offer crumbs to kids,” he previously told The Epoch Times. “I'll change the work rules. I offered that to them, and that wasn’t good enough.”

Several Republicans indicated they were voting “no” to send the bill back to the Finance Committee for more negotiation.

“At this point, we want to see a committee process,” Sen. John Hoeven (R-N.D.) told The Epoch Times. “There’s going to have to be a process to do that before Republicans are going to agree to cloture and actually get on the bill.”

Criticism of Bill

On the day of the vote, Sen. Steve Daines (R-Mont.) said the bill was sprung on the Senate the previous evening.

“It’s purely a show vote because he’s got some endangered Senate Democrats that want to have this vote,” Daines said, alleging that the bill’s failure would give Democrats a basis to criticize Republicans before the November elections.

Other senators had fiscal concerns about the bill.

“It’s another borrow and spend bill ... another $60 [billion] to 70 billion,” Sen. Mike Braun (R-Ind.) told reporters.

Manchin told The Epoch Times after the vote: “[The credit has] been off for two years. It has not affected the economy whatsoever, and if anyone cares at all about $35 trillion of debt and what debt’s going to do to the next generation, [they] should care about giving more away. Dedicate that amount of money towards debt reduction. I don’t think it really helps the people that need it the most ... and next of all, [it’s] giving money away in tax relief that we don’t need.”

Sanders told The Epoch Times that he opposed the bill because of its business tax provisions.

“I voted against it because, at a time of massive income and wealth inequality, this legislation provided tens of billions of dollars in tax breaks for some of the largest, most profitable corporations in the country,” he said. “We have got to deal with childhood poverty. We need a permanent expansion of the Child Tax Credit. This bill doesn’t do it.”

Sanders said he preferred a Child Tax Credit expansion akin to the American Rescue Plan Act of 2021, which made the credit fully refundable and increased it to $3,000 for that year.

Many organizations and Senate Democrats had been pushing Schumer to bring a vote on the bill before the summer recess, scheduled to last until Sept. 9.

“We want to get the Child Tax Credit done. It’s an urgency,” Sen. Cory Booker (D-N.J.) told The Epoch Times.

Sen. Jacky Rosen (D-Nev.) wrote to Schumer in February, urging him to “bring this critical middle-class tax relief legislation to the Senate floor as soon as possible.”

The vote was held on the last day before the Senate adjourned for its recess.

“If the bill becomes law, half a million kids would come out of poverty, 16 million kids from low-income households would see benefits increase, and business owners that invest in R&D and buy new equipment would see more money coming back to them, leading to more jobs,” Schumer said on the morning ahead of the vote.

He attributed the bill’s failure to the 2024 election.

“It’s something they seem to be doing under orders from their candidate, Trump,” Schumer said. “They want to block everything.

“It’s not a way to win an election.”

Rounds, the bill’s leading opponent, said the bill could be passed in 2025 in connection with efforts to reauthorize business tax cuts passed in 2017 under the Tax Cuts and Jobs Act championed by President Donald Trump.

“It will happen next year, if we’re not able to make a deal this year,” Rounds told The Epoch Times. “We just simply have to get the rest of the tax policy fixed as well.”

If the bill is not passed in the remainder of the 118th Congress, it will lapse by Jan. 2, 2025.

Smith and the Trump campaign did not respond to requests for comment before publication.

Joseph Lord contributed to this article.