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House GOP leaders moving forward on bipartisan plan that expands child tax credit as some Republicans express concern

<i>Francis Chung/POLITICO/AP</i><br/>House Speaker Mike Johnson speaks with reporters as he departs a vote at the US Capitol on January 29.
Francis Chung/POLITICO/AP
House Speaker Mike Johnson speaks with reporters as he departs a vote at the US Capitol on January 29.

By Melanie Zanona and Tami Luhby, CNN

House GOP leaders are moving forward with a $78 billion bipartisan tax package even as some Republicans express reservations over the deal, which includes an expansion of the popular child tax credit — a top Democratic priority.

Speaker Mike Johnson said at a private event on Monday that the bill – which also restores some business tax breaks that are favored by Republicans – will come to the floor under a suspension of the rules, which is an expedited process that requires a two-thirds majority for passage.

“It is gonna come up,” Johnson said at a Congressional Institute event on Monday, according to a transcript obtained by CNN. “There’s a few subsets of members you have concerns for various reasons, but we’re gonna probably run it on suspension. And I think you’re gonna get a very high vote tally, probably on both sides of the aisle.”

He added: “There’s a lot of great policy in there. It’s not a perfect bill. We’re not going to get a perfect bill when we have divided government as we do.”

The bill was discussed at length during a House GOP leadership meeting Monday and a floor vote could come as soon as this week, though GOP sources cautioned it hasn’t been set in stone yet.

House Ways and Means Committee Chairman Jason Smith, a Missouri Republican who negotiated the deal with his Democratic counterpart in the Senate, presented the deal to a smaller group of Republicans on Monday evening and is expected to brief the full conference on Tuesday.

Concerns over the child tax credit expansion

But some Republicans are pouring cold water on the proposal. House Freedom Caucus Chairman Bob Good of Virginia said he’s concerned about expanding the child tax credit for people who aren’t paying taxes and worried that illegal migrants may potentially receive it – something the Ways and Means panel has pushed back on – and also took issue that it would be brought to the House floor under suspension of the rules.

“I’ve expressed those concerns. I think we need to fix the child tax credit and bring it up under the rule,” he said.

GOP Rep. Byron Donalds of Florida, also a Freedom Caucus member, echoed a similar sentiment: “I’m leaning ‘no’ right now, but I want to hear out Chairman Smith, really sit down, go through it all,” he said.

Meanwhile, some Democrats are opposed to the deal because they don’t think the proposal broadens eligibility for the child tax credit to enough families who currently receive no credit or only a partial amount because they earn too little.

The package calls for temporarily enabling lower-income families to claim more of the credit. It would increase the maximum refundable credit for those households who owe little or no income taxes. And it would allow low-income families with more than one child to would receive the same credit for each of their kids, just as higher-income families already do.

In addition, it would adjust the tax credit for inflation starting in 2024. And families would have the choice of using their earnings in the current year or the prior year, in case their earnings were volatile. These provisions would be in effect for three tax years, from 2023 through 2025.

Notably, the deal does not change the minimum earnings threshold of $2,500 needed to begin to claim the credit. Smith has emphasized that the child tax credit expansion “keeps work requirements at the heart of the program.”

Also, the package maintains the 2017 Republican Tax Cuts and Jobs Act requirement that children must have Social Security numbers for their families to file for the credit, which “safeguards against claims made by illegal immigrants and ineligible persons,” according to the House Ways & Means Committee.

The proposal would help more than 80% of the 19 million children who receive no credit or a partial one because their families earn too little, according to the left-leaning Center on Budget and Policy Priorities.

Increasing SALT cap

Another hurdle that has developed is that some Republicans in blue states are pushing for the package to increase the temporary $10,000 cap on state and local tax deductions from federal income taxes that was imposed by the 2017 GOP tax law.

“There needs to be a fix for SALT,” said GOP Rep. Mike Lawler of New York, who expressed those feelings during a GOP whips meeting.

Various changes have been floated, including increasing the cap to $30,000 or $50,000 and adding an income threshold so that high-earners would be more restricted in what they could deduct.

But raising the cap would be very costly and would increase the deficit, said Henrietta Treyz, director of economic policy research at Veda Partners, a consulting group that provides policy analysis to institutional investors. That would be a tough sell to many GOP lawmakers.

The current package accelerates a deadline for businesses to file for a Covid-19-era employer tax credit, which is estimated to offset nearly all of the package.

Plus, raising the SALT deduction limit would mean that the individual tax breaks would become larger than those given to businesses, she said. That would negate another selling point GOP supporters of the package are using to convince their peers to vote for the deal.

The cap is set to expire after 2025. The federal government is projected to lose an additional $116 billion in tax revenue in 2026 once the limit on the deduction disappears, according to the Joint Committee on Taxation.

House GOP Whip Tom Emmer — who was seen huddling with blue state Republicans on the floor Monday — acknowledged “some people disagree with some of the things, other people want more stuff in it. So it’s just the way it works.”

CNN’s Morgan Rimmer, Sam Fossum and Annie Grayer contributed to this report.

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