The chairmen of Congress' top tax policy committees announced on Tuesday a bipartisan initiative to enhance the child tax credit and reintroduce various tax breaks for businesses. 

According to the Associated Press, Senator Ron Wyden, the Democratic chairman of the Senate Finance Committee, and Representative Jason Smith, the Republican chairman of the House Ways and Means Committee, announced the bipartisan agreement.

The approximately $78 billion $78 billion in tax cuts, which garnered support from both political parties' lawmakers, would reportedly be paid for by immediately phasing out a COVID-19 pandemic-related tax break that encouraged businesses to retain employees on their payroll.

Lawmakers Working to Enhance Child Tax Credit

The lawmakers have been negotiating for months on a tax package addressing numerous priorities before the legislators focus on the election season.

Wyden said he aims to get the measure approved before the Internal Revenue Service (IRS) starts accepting and processing tax returns on January 29.

In crafting the agreement, Democratic lawmakers were focused on enhancing the child tax credit. Presently set at $2,000 per child, with only $1,600 being refundable, the tax credit is accessible to parents with minimal or no federal income taxes.

The proposed bill would gradually increase the maximum refundable child tax credit to $1,800 for 2023 tax returns, $1,900 for the next year, and $2,000 for 2025 tax returns.

The bill would also allow businesses of all sizes to deduct research and development costs immediately rather than over the course of five years. 

It would also enable companies to entirely remove equipment, machinery, and technology purchases and provide more flexibility in determining how much borrowing can be deducted.

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Addressing Child Poverty

The Center on Budget and Policy Priorities, a nonpartisan research organization and policy institute, projected that around 16 million children in low-income families would benefit from expanding child tax credits.

In a statement, First Focus Campaign for Children President Bruce Lesley emphasized the importance of the improved child tax credit in addressing rising child poverty, homelessness, and hunger rates. Lesley noted that it is a significant step forward in the fight to end child poverty in the US and to give every child what they need and deserve.

"We are pleased that some lawmakers put differences aside to make this deal possible, but it still faces a number of barriers to becoming law... If enacted this month, the improved credit would provide some urgently needed help to millions of children this tax-filing season," Lesley said.

"We look forward to working with Congress to continue to improve the Child Tax Credit and advance additional measures to meet the needs of all our nation's children. We must keep working to end child poverty, alleviate economic hardship and ensure that all children, regardless of who they are or where they come from, can live healthy, happy lives," he added. 

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