Pass the Tax Relief for American Families and Workers Act

OPINION:

In an increasingly rare occasion in Washington, Congress is on the verge of passing a really good tax bill that provides strong, pro-growth investment incentives for businesses while giving working families tax relief through an expanded child tax credit.

The Tax Relief for American Families and Workers Act is sitting on the goal line, ready to be carried into the end zone by House Speaker Mike Johnson and his colleagues. Republicans should take this win and spike the football in delivering a tax bill. Unfortunately, some are considering sinking the bill over its expanded child tax credit.

This would be a bad policy decision and a bad political decision. Most notably, it would represent the GOP turning its back on a pro-family tax policy that the party has owned and shaped for decades.

In 1997, the child tax credit was the centerpiece of the Republican-authored Taxpayer Relief Act. Like the current tax package, the 1997 bill also included important growth-oriented provisions, like lower capital gains tax rates and Roth individual retirement accounts. This legislation received strong bipartisan support and the signature of then-President Bill Clinton.

Republicans subsequently refined the credit twice under the presidency of George W. Bush — doubling its size, expanding eligibility and instituting work requirements.

In 2017, then-President Donald Trump doubled the child tax credit again — boosting its value to $2,000 while again preserving the work requirements established by Mr. Bush and combating fraud through tougher eligibility checks.

Unfortunately, at the height of the pandemic, President Biden and congressional Democrats tried to convert the credit into a universal benefit and undermine much of its purpose. They passed partisan legislation that eliminated the credit’s work requirements and boosted its size from $2,000 to as much as $3,600.

This put the fate of the child tax credit in jeopardy as it became less of a tax benefit to help working families offset the high costs of raising children and more of a fixed welfare program that could serve as an incentive not to work. Some suggested this could force as many as 1.5 million people out of the labor force if it were made permanent.

And making the enhanced child tax credit permanent was certainly the goal of many congressional Democrats after it expired at the end of 2021. The Build Back Better Act of 2022, which passed a Democratic-controlled House, would have created a fully refundable tax credit of up to $3,600 with no work requirements.

Other Democrats would like to go even further. Take, for instance, the End Child Poverty Act by Rep. Rashida Talib of Michigan. It would eliminate the child tax credit and replace it with a monthly payment of $393 per child. Under this legislation, the federal government would pay every household more than $4,700 a year for each child. The checks would flow without any work requirements and without a minimum or maximum income threshold. This is the type of universal benefit that could be disastrous for the fiscal well-being of our nation as well as for labor markets.

Republicans can stop this attempt to transform the child tax credit from a tax credit to a universal welfare benefit by expanding and strengthening the credit while retaining its fundamental structure. And that is exactly what the Tax Relief for American Families and Workers Act would do — and with broad, bipartisan support.

This legislation will set the tone for preserving work requirements, heading into a larger discussion on tax reform. That’s because this version of the credit will expire at the end of 2025, concurrently with large portions of the Tax Cuts and Jobs Act of 2017.

That legislative battle will likely determine the contours of our tax code for decades. Republicans will be much better off by tilting the playing field to their advantage — not just on the child tax credit, but also on important tax provisions like the deductibility of capital investments and research and development.

Passing this tax package is a clear win for Republicans that would position them for even bigger policy gains next year. Unfortunately, they’ve been struggling to figure out the difference between wins and losses.

• Brandon Arnold is executive vice president of the National Taxpayers Union, a nonprofit dedicated to advocating for taxpayer interests at all levels of government.