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Democrats Race to Advance COVID-19 Relief Package

Posted on Feb. 23, 2021

The House Budget Committee approved a relief package that makes several changes to the tax code as Democrats attempt to rush the bill through Congress.

The February 22 approval sends the bill to the House Rules Committee to be marked up before heading to the House floor on February 26 or 27.

The Budget Committee took up the 591-page legislation after nine different House committees, including the Ways and Means Committee, marked up the legislative text over the past two weeks.

Budget Committee Chair John A. Yarmuth, D-Ky., said Congress is in a race against time to pass the bill as the death toll from the coronavirus keeps rising. “This February, an American has died of COVID every 32 seconds, so while debate is important, we also need to get on with it,” Yarmuth said.

Senate Finance Committee Chair Ron Wyden, D-Ore., hopes the $1.9 trillion American Rescue Plan Act can get Senate approval before March 14 so no cliff is created for unemployment benefits. “My bottom line is getting this bill done as quickly as possible,” Wyden said in a call with reporters. The Senate, unlike the House, will not be holding markups of the bill, but Wyden said his caucus remains engaged on what it wants to include in the package.

But the parliamentary procedure known as reconciliation that allows Democrats to approve the relief package with a simple majority may hit some bumps related to the possible inclusion of a proposal increasing the federal minimum wage to $15 per hour. 

Tax Changes 

The relief bill would temporarily expand and extend some refundable credits like the child tax credit and earned income tax credit. The EITC would be expanded for 2021 and the age to claim the credit reduced from 25 to 19, while the child tax credit would be fully refundable for 2021.

The bill would also extend the employee retention credit that was implemented by the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136). Democrats also settled on sending $1,400 checks to qualifying taxpayers who make less than $75,000 a year.

There was some debate among Democrats over whether the checks need to be targeted more toward those making less than $50,000, but Democrats living in states where the cost of living is higher lobbied for the threshold to stay at $75,000.

Also in the bill is a provision repealing the U.S. affiliated group election to allocate interest expense on a worldwide basis, effective for tax years beginning in 2021.

Some lawmakers, including Ways and Means members Thomas R. Suozzi, D-N.Y., and Bill Pascrell Jr., D-N.J., are hoping that Senate Majority Leader Charles E. Schumer, D-N.Y., will be able to use his position to include a provision repealing the $10,000 state and local tax deduction cap when the Senate draws up its version of the relief bill.

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