House Ways and Means Chairman Richard Neal (D-Mass.) offered a glimpse into what his tax-writing committee will focus on after lawmakers return to Washington, D.C. next week: Childcare.
“[I]t is my intent that we will […] begin our work to remove hidden barriers to workforce participation caused by the inadequacy of our caring infrastructure,” Neal wrote to his fellow lawmakers on Monday.
This effort will seek to permanently extend the changes to the Child Tax Credit, Earned Income Tax Credit, and the Child and Dependent Care Tax Credit that were made in the American Rescue Plan, which was enacted into law in March.
“[I]f employers or states already have paid leave policies that support their workers, we will provide additional support so they can maintain and improve them,” Neal wrote.
It is up to us to reimagine it in a way that puts workers and their families first, that makes it more equitable, and ultimately, sets Americans up for the better days that lie ahead. I look forward to pulling many of the levers within the Ways and Means jurisdiction to make this happen - Chairman Neal
This work will be paired with the Ways and Means Committee creating infrastructure legislation that will align closely with the American Jobs Plan that President Joe Biden released on March 31.
The White House projects the American Jobs Plan will cost $2.5 trillion over eight years. The administration says those costs will be paid over the next 15 years by increasing corporate taxes and various other tax changes in the plan.
The plan, as proposed:
- Increases the corporate income tax rate from 21% to 28%.
- Imposes a 21% global minimum tax on U.S. corporations, which would be calculated on a country-by-country basis. (The Biden plan also gives a tip of the hat to the OECD-led effort to adopt a global minimum tax).
- Eliminates the rule allowing U.S. companies to pay zero taxes on the first 10% of profit when they locate investments in foreign countries.
- Repeals the Foreign Derived Intangible Income (FDII) deduction.
- Creates a 15% minimum tax on book income for the largest corporations (not defined).
- Denies company expense deductions for moving jobs offshore.
- Imposes more restrictions on corporate inversions.
- Eliminates special tax preferences for fossil fuels.
In his letter to lawmakers, Chairman Neal did not mention the fate of these tax increases in legislation he has proposed to complete.
Legislation that makes child-related tax relief permanent will be expensive. To wit, permanently extending the expanded Child Tax Credit that became law as part of the American Jobs Plan would cost $1.6 trillion over ten years, according to the Tax Foundation, a non-partisan tax thinktank.
Creating the legislative text for the American Jobs Plan is expected to take weeks to complete, if not months. The House is projected to vote on this package by July 4, at the earliest. Lawmakers will likely be fiddling with the details of this bill until that vote.