The House could pass a short-term package of tax breaks as soon as this week, but the measure faces some Republican concerns that the expanded child tax credit included in the deal could help President Joe Biden’s reelection campaign or encourage working parents to quit their jobs.
The bill, which includes provisions to raise limits on the Section 179 expensing provision and restore bonus depreciation to 100%, resulted from an agreement between House Ways and Means Committee Chairman Jason Smith, R-Mo., and Senate Finance Chairman Ron Wyden, D-Ore.
The Ways and Means Committee approved the package 40-3 on Jan. 19, with unanimous support from the panel’s Republicans, and the bill is listed as a possible item for action on this week’s House calendar.
Ahead of a possible floor vote, Smith has been trying to knock down GOP concerns about the impact of the child tax credit. A statement issued Friday by the Ways and Means Committee said a “simple reading of the bill” shows the Biden administration “is explicitly prohibited from manipulating the bill’s tax relief in an attempt to send politically timed refund checks against the interests of the American people.”
A second statement from the committee rebutted claims that the credit would benefit illegal immigrants or encourage working parents to quit their jobs.
The tax credit would continue to be structured along the requirements in the 2017 Tax Cuts and Jobs Act, Smith said. “Maintaining the credit structure, and rejecting calls for monthly checks and no work requirements, incentivizes work and benefits millions of hardworking American families,” Smith said. He noted that the credit can’t be claimed without Social Security numbers for the children.
The bill also faces Republican opposition in the Senate, where it will need 60 votes to pass.
“If you assume that a Republican is going to be in the White House, I would rather negotiate a child tax credit in the context of all the other tax extenders and tax policy that expires next year that was implemented with the Tax Cuts and Jobs Act,” Sen. Thom Tillis, R-N.C. told reporters last week, referring to the expiring provisions of the 2017 bill that then-President Donald Trump signed into law.
Sen. John Boozman, R-Ark., told Agri-Pulse he was concerned the bigger tax credit would discourage parents from working, but he acknowledged he has gotten pressure from industry interests to address the business tax breaks. “I've heard about that for many, many months because these things really are important in industry,” Boozman said.
The existing Section 179 provision allows businesses to write off up to $1.16 million of the cost of equipment and software for 2023, with the limit phased down dollar for dollar as spending exceeds $2.9 million. The House bill would raise the expensing limit to $1.29 million and increase the phaseout threshold to $3.22 million, with both indexed to inflation.
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The bonus depreciation provision, which allows a business to immediately write off the cost of equipment or buildings, is scheduled to phase out under the TCJA. The provision dropped from 100% to 80% of the purchase price in 2023 and is scheduled to fall to 60% this year, 40% in 2025 and 20% in 2026 before ending in 2027.
Tax experts say that failing to restore bonus depreciation to 100% would effectively mean a tax increase on farmers who use it.
Also this week, a House Energy and Commerce subcommittee will hold a hearing Tuesday on concerns about the potential breaching of dams on the Snake River in the Pacific Northwest.
“The Columbia River System and the Lower Snake River Dams are the beating heart of the Pacific Northwest, yet that hasn’t stopped the Biden administration from apparently colluding with special interest groups to lay the groundwork to remove them,” Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers, R-Wash., and Energy, Climate, and Grid Security Subcommittee Chairman Jeff Duncan, R-S.C., said in a statement announcing the hearing.
“We are deeply disturbed by the blatant disregard for the enormous hydropower, irrigation, and navigation benefits these dams provide, as well as a willingness to ignore the voices of those who depend on the dams the most.”
McMorris Rodgers and five other Republicans from the region introduced legislation last week to prohibit federal funding for the White House’s Columbia River Basin Initiative, a $1 billion plan to reverse salmon declines in the Columbia and Snake system.
The plan would fund fish restoration efforts and tribal clean energy projects, implement changes to federal hydropower operations, and look at how to offset the transportation, recreation, and irrigation impacts resulting from the potential removal of four dams on the lower Snake River.
The hearing witnesses will include representatives of the White House Council on Environmental Quality, the Department of Energy and the Bonneville Power Administration.
Here is a list of agriculture- or rural-related events scheduled for this week in Washington and elsewhere (all times EDT):
Monday, Jan. 29
Farm Credit annual meeting, through Tuesday, JW Marriott, 1331 Pennsylvania Avenue NW.
Tuesday, Jan. 30
Fifth meeting of the U.S.-EU Trade and Technology Council, co-hosted by U.S. Representative Tai, Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo.
USTR’s chief agricultural negotiator, Doug McKalip, and Alexis Taylor, USDA’s undersecretary for trade and foreign agricultural affairs, participate in fireside chat at the International Production and Processing Expo, Atlanta.
10 a.m. — House Energy and Commerce subcommittee hearing on the impact of removing the Snake River dams, 2123 Rayburn.
10:30 a.m. — House Energy and Commerce subcommittee hearing on EPA’s Greenhouse Gas Reduction Fund, 2322 Rayburn.
Wednesday, Jan. 31
CattleCon, annual meeting of beef industry, Orlando.
Thursday, Feb. 1
8:30 a.m. — USDA releases Weekly Export Sales report.
Friday, Feb. 2
USTR’s McKalip speaks at the Growth Energy Senior Leadership Conference, Marco Island, Florida.
For more news, go to Agri-Pulse.com.
