“We strive to both create good tax policy and eliminate bad tax policy.” These are the words of Chairman Smith of the Ways and Means Committee to conclude his explanation of the bipartisan tax deal currently being negotiated in Congress. The Tax Relief for American Families and Workers Act strives to do just that in a number of ways.
The bill intends to restore the immediate expensing of research and development investments made in the United States, which will provide direct support to over 21 million jobs and generate more than $70 billion in new research and development. This expensing was part of the 2017 TCJA and the amortization toward 0% began in 2022. Restoring this important provision decreases the cost of research and development and tends to increase the extent to which companies are inclined to invest in this important but financially uncertain aspect of industry.
In more good news for businesses, the bill restores 100% immediate expensing of investments in facilities, equipment and machinery. This is another proposition taken from the 2017 TCJA which has been amortizing since 2022. While in full force, this provision led to a 20% growth in US investment; its reinstatement can allow us to hope for similar results.
The bill also has the potential to create 867,000 new jobs and provide Americans with more than $58 billion in additional take home pay by boosting interest expense deductions. Although tax deductions and credits for businesses can sometimes be misrepresented as being only beneficial to business, it is clear that reducing taxation on businesses has the potential to translate into better outcomes for individuals and families.
The Tax Relief for American Families and Workers Act provides relief to families by updating the Child Tax Credit, allowing the $2,000 topline rate to adjust for inflation and expanding the refundability over three years while retaining work incentives. In a world where many feel they can’t afford to have children and in a state like Utah where many families continue to have children anyway, this relief is meaningful and needed.
The bill, if passed, would become the first bipartisan tax deal since December 2020 and has already passed the Ways and Means Committee with unanimous Republican support and most Democrats voting in its favor. Due to its potential to create jobs, grow investment and provide relief to families, this bill will have a positive impact on both Utahns and Americans across the nation, and we encourage Congress to pass this bill with the utmost urgency.