The House passed the Tax Relief for American Families and Workers Act (TRAFWA) in late January and sent it to the Senate. Now more than a month later, the Senate is faced with an important choice: will they pass the version of the bill approved by the House and promptly get it to the president’s desk? Or will they amend the bill, which would necessitate another House vote before it could be enacted into law?
The path forward is murky, as some Senate Republicans have objected to certain portions of the bill and others have called for amendments to improve it. The Senate has every right to modify the House-passed legislation, if they so choose, but the path to doing so is fraught with risk. There are certainly opportunities to improve the bill, but doing so could be tantamount to opening up a Pandora’s box. The Democratic-controlled Senate could defeat any Republican amendments that were offered up and, quite conceivably, opt to instead adopt changes that would substantially pull the bill to the left. If that’s the case, the bill would likely die in the House.
For example, Democrats could attempt to attach any one of the following amendments that could effectively kill the legislation:
Elimination of work requirements for Child Tax Credit (CTC)
In 2021, every Senate Democrat voted in favor of the American Rescue Plan Act, a massive bill that, among many other things, significantly altered the Child Tax Credit. One of the most impactful and problematic changes to the credit was the elimination of the earnings requirement for the refundable portion of the tax credit. After the plussed-up CTC expired in 2022, the work requirements were reinstated, however, according to reports, Democratic negotiators attempted to remove the earnings test during TRAFWA negotiations. The Senate could do the same.
Larger CTC
Not only did ARPA eliminate CTC work requirements, it also made the credit much larger – increasing it from $2,000 per child to as much as $3,600 for younger children. The Build Back Better Act, which was approved by the Democrat-controlled House in 2021 but never became law, would have extended the larger credit size for another year. This remains a high priority for many Democrats, as well as some Republicans, despite its hefty price tag.
SALT Expansion
The State and Local Tax (SALT) exemption has helped state politicians in left-leaning states raise taxes on their residents while shielding them from much of this financial burden. It was wisely capped by the Tax Cuts and Jobs Act of 2017, yet many lawmakers from high-tax states like New York and California have repeatedly attempted to raise or eliminate the cap. The SALT issue is a bigger political problem in the House than the Senate, but it is concerning that Senate Majority Leader Chuck Schumer is a strong advocate for a higher SALT cap.
Minimum Wage Hike
During consideration of the American Rescue Plan Act in 2021, Senator Bernie Sanders (I-VT) introduced an amendment to increase the federal minimum wage from $7.25 to $15, which would have hurt millions of struggling small businesses and killed countless jobs across the country, but most acutely in areas with a lower cost of living. Largely because it violated the “Byrd rule,” the amendment failed on a procedural vote by a margin of 42-58. Because TRAFWA is being moved through regular order and not reconciliation, there is no Byrd rule and a minimum wage amendment could be more difficult to defeat.
Though it is not perfect legislation, NTU strongly supports TRAFWA and recommends its swift passage. While it is understandable that some Republicans on the Hill would like to improve the bill, the path to doing so is dangerous and should be approached with great caution.