Ever since Joe Biden took office, the economy has gone down the tubes. Costs are sky-high, mortgage rates are absurd, and America is steadily losing its competitive advantages in trade and innovation over China. Despite pundits desperately trying to tell everyone that the economy is actually booming, voters correctly recognize that not only is it terrible, but it’s also likely to stay this bad (or even get worse) for the foreseeable future.
And we have to be honest: under President Biden, it’s not likely that things will get much better. But there’s at least some hope in the short term. Republicans have a majority in the House and can, if they play their cards right, use their leverage to lessen a bit of the damage Biden’s economy is wreaking on working families all across the country.
On that front, luckily, it seems House Republicans are making some headway. Earlier this week, House Ways and Means Chairman Jason Smith (R-Mo.) unveiled a long-anticipated tax package after weeks of negotiations. The Tax Relief for American Families and Workers Act extracts a number of key concessions from Democrats to provide some relief to working families, while also sharpening our national competitive edge.
The most important reforms come to the child tax credit (CTC). You wouldn’t know it from the mainstream news coverage (or lack thereof), but the United States is in the midst of a population crisis. The Congressional Budget Office projects that the total fertility rate in America will stay at or around the near-record low of 1.66 for years to come, well below the 2.1 required to keep the population from shrinking. Democrats often don’t see this as a problem – in their minds, they can always supplement the decreasing American population by pursuing even more aggressive open-border policies. But Republicans should see this for the crisis that it is.
To that end, Republican negotiators have smartly decided to end the current CTC’s needless penalty on families that have multiple children. When, as is the case now, the American population is in danger of rapidly shrinking, penalizing parents for having more children makes absolutely no sense.
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The proposal also phases in an increase to the credit’s refundability. This new plan would equalize the benefit for both poor and rich families – currently, only richer families can receive the maximum benefit.
Finally, it would adjust the tax breaks by requiring them to account for inflation. A $1,600 tax break is currently worth around 15 percent less than it would have been when Biden took office. Inflation is, in this case quite directly, a tax on working and middle-class families. House Republicans should do everything they can to counteract that.
All of these are commonsense proposals that confront the twin crises of population collapse and inflation head on. Republicans owe it to their constituents to fight for at least that much.
But while the framework is encouraging, the bill still needs to pass out of the Congress. Not to mention that time is running out to allow taxpayers to fully maximize the incentives included in this tax package. That’s because the changes to the CTC would be retroactive to 2023, meaning that lawmakers need to pass a bill before the start of tax season in order for taxpayers to be eligible to claim this on their tax returns. Allowing the clock to run out before passage would do a disservice to millions of taxpayers.
In addition to the CTC provisions, the framework also includes a number of business-side provisions that will improve our competitive position versus China and the rest of the world. We should all be glad to see this tax package reinstate expensing for research and development costs, and extend 100 percent bonus depreciation, each through 2025. Businesses used to be allowed to immediately write off their investments into research and development, but beginning in 2022 it was stretched over a period of five years. Under the tax deal, the research and development tax credit goes back to the way it was under President Trump – an overdue change.
Republicans have an opportunity to support working families and businesses – and a chance ahead of the 2024 elections to show the country that our majority can govern and deliver results. But with the clock ticking to pass this package before the end of January, lawmakers need to move posthaste. Let’s hope they can do whatever it takes to get this done.
Terry Schilling is the president of American Principles Project. Follow him on X @Schilling1776.
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