Rep. Jason Smith (R-Mo.), a member on the tax-writing House Ways and Means Committee who seeks to chair the panel in the next Congress, said on Wednesday that there is a 51% chance that a year-end tax bill passes Congress before January 2023.
“Flip a coin,” he said during a press event sponsored by Punchbowl News about passing a year-end tax bill.
“I think if you look at a huge [tax] package by December 16th or even the end of the year, I would give it a fifty-one percent likelihood that it’s going to happen,” he said.
Smith, like other lawmakers and staffers, contend that there is broad, bipartisan support for modifying business-related tax provisions, like expensing R&D costs, and allowing for accelerated depreciation. However, bipartisan support breaks down when it comes modifying the Child Tax Credit.
“Where you see a lot of gridlock is the expansion of the Child Tax Credit that was in the American Rescue Plan,” Smith said.
That bill increased the Child Tax Credit to $3,600 for qualifying children under age 6 and $3,000 for qualifying children under 18. Before the legislation was enacted, the Child Tax Credit was $2,000 for qualifying children.
The legislation also removed the work requirement for receiving the credit, which Smith said removed people from the workforce.
“If you look at the year 2021, only 1.6 million people returned to the workforce – for all of 2021… That work requirement was suspended on December 31st … Work requirements like the Child Tax Credit make a huge impact,” Smith said.
A large contingent of Democratic lawmakers currently want to extend the Child Tax Credit rules to what they were in the American Rescue Plan. Most Republicans oppose this move. Smith said if Democrats surrendered their pursuit to expand the Child Tax Credit, a year-end tax bill would easily pass both chambers of Congress and likely be signed into law by President Joe Biden.
“If we want a tax extender package [i.e., a year-end tax bill] that was universal for bipartisanship, there’s a lot to get done – and it could get done,” Smith said.
Democrats are unlikely to abide by Smith’s request to drop their Child Tax Credit demands, which is why the lawmakers says a coin flip could determine whether Congress passes a tax bill by year-end.