Biden’s Child Tax Credit Plan Backed by House Democrats

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(Bloomberg) — House Democrats are seeking to extend the recently expanded child tax credit through 2025, endorsing a key component of President Joe Biden’s social safety net plan.

The language is included in bill text released late Friday by the House Ways and Means Committee, which will continue debating its portion of Biden’s $3.5 trillion economic agenda next week.

The committee’s expansive proposal would also extend energy credits and allow the government to negotiate prices with drugmakers, among other changes.

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The pandemic relief law passed in March temporarily boosted the credit for children under six to $3,600, and $3,000 for older children. The IRS started paying out the credit this summer, sending monthly payments of up to $300 per child. 

While some House Democrats have pushed to make the more generous child tax credit and monthly payments permanent, doing so would be expensive and could crowd out other lawmaker priorities vying for a place in the budget reconciliation package.

The Joint Committee on Taxation estimated boosting the credit for 2021 alone will cost the government $109.5 billion.

Democrats have touted the expanded tax credit, banking on it as a successful campaign message in the 2022 midterm elections. Representative Alexandria Ocasio-Cortez, a New York Democrat, has described the expansion as “the largest anti-poverty program in a generation.”

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Drug Pricing

The Ways and Means Committee will also debate language empowering the government to negotiate with drugmakers and peg prices for medications in the U.S. relative to their cost in other countries. 

The Energy and Commerce Committee included similar language in its portion of the reconciliation package and the House passed a similar version of this bill in 2019.

The provision would generate more than $450 billion in savings to the government and is coupled in this package with a penalty for drugmakers that increase the price of their drugs and repeal of a Trump-era drug rebate policy that could cut government spending further.

The Ways and Means Committee also proposed making permanent a two-year expansion of the Affordable Care Act’s insurance subsidies started earlier this year. 

Energy Credits

The Ways and Means bill would also extend a number of energy credits for 10 years. these include incentives commonly used by the wind and solar industries. 

The plan would expand a popular consumer tax credit for electric vehicles to as much as $12,500 as long as certain conditions are met. And it would create a new tax credit for producers of nuclear energy — something the struggling sector has been lobbying for.

Separately, the proposal would establish new tax credits to issuers of bonds used for state and local infrastructure projects. 

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