Joint Committee on Taxation estimates have shown that break mainly accrues to wealthier households. Although the provision affects a wide swath of businesses, Democrats have pointed out that real estate developers like the Trump Organization are able to take advantage of it. That issue’s grown more salient since a series of New York Times stories earlier in the week about Trump’s ability to erase his income tax bills through creative loss accounting.
Another provision affects net operating losses: the March law enabled firms to “carry back” losses arising in 2018, 2019 or 2020 in order to claim refunds on taxes paid in up to five prior years. Democrats want to limit that break to losses this year and last year, and only allow carrybacks to tax years starting in 2018, when corporate taxes dropped under the GOP tax law enacted the prior year.
Democrats’ earned income tax credit provisions would, among other things, nearly triple the maximum credit for childless workers in 2020, to almost $1,500 and expand the pool of eligible recipients. The left-leaning Center on Budget and Policy Priorities says the provision would benefit about 15.4 million individuals, reducing the number of them “taxed into poverty” by 96 percent.
The child tax credit provisions would boost the maximum amount a lower-income household can claim, from up to $1,400 to the full $2,000 per child under age 17 that households currently earning up to $400,000 benefit from. Lower income families currently can only receive the smaller amount because they don’t have enough tax liability to soak up the presently nonrefundable credit.
“Where we ended yesterday was my concern about no money for the refundability, which is a very important part of our legislation,” Pelosi said. “They seem pretty wedded to their tax cut for the high end. I hope they’d be wedded to a tax credit for low-income children and families.”
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