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Democrats Hold Out for Refundable Credits in Stimulus Talks

Posted on Oct. 19, 2020

House Democrats have made expanding refundable credits a central part of the next pandemic relief stimulus package as they try to accomplish a long-term goal of helping low-income families.

House Ways and Means Committee Chair Richard E. Neal, D-Mass., criticized the Trump administration in a statement October 16, saying its proposal fails to include robust assistance required by most Americans.

“The Trump plan fails to include expansions of the [earned income tax credit] and [child tax credit], key tax credits that reward work and support low-income families,” Neal said.

In a letter to colleagues October 15, House Speaker Nancy Pelosi, D-Calif., reiterated her desire to include the tax credits for families as part of a larger relief package. The expansion of the EITC and child tax credit has been in every package proposed by House Democrats dating back to March.

The Joint Committee on Taxation estimates that the latest proposal by Democrats to make the child tax credit fully refundable found in the updated Health and Economic Recovery Omnibus Emergency Solutions Act (H.R. 925) would cost the government $27.8 billion over 10 years, while improving the EITC for working families with no children would cost $9.6 billion.

Neal said those are “strong anti-poverty” tax measures that should be included in the next stimulus package. Neal has been outspoken on the issue since assuming his position as Ways and Means chair. “Before I’m done as chairman, I am going to expand EITC,” he told reporters October 1. 

Expansion of those credits is also a priority for Senate Democrats, who have introduced bills on the issue and tried to include EITC and child tax credit expansion in a year-end package in 2019. Neal argued that additional money to those in need during the COVID-19 pandemic helps not only low-income families but also the surrounding economy.

Negotiations between the administration and Pelosi continue, but no deal has been agreed to so far. Treasury Secretary Steven Mnuchin said a deal is unlikely before the November election. Senate Republicans are also planning to vote October 19 on a skinny relief bill to extend the Paycheck Protection Program, among other measures. 

Senate Majority Leader Mitch McConnell, R-Ky., said the package they will be voting on will cost much less than the $1.8 trillion deal being negotiated by the White House and Democrats. Senate Republicans have been hesitant to spend more money on a relief package, and it is unclear whether a deal reached between Democrats and the administration would have the backing of key Republicans. President Trump, however, assured the public during a town hall hosted by NBC October 15 that Republican lawmakers will go along with whatever deal is agreed to between the two sides.

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