Corporate America must step up to save the child tax credit

Five years ago, 181 CEOs signed a landmark agreement. statement We are committed to leading our company in the interests of our stakeholders, including our shareholders as well as our customers, workers, suppliers and the greater community.

Although the pledge received positive attention, it was the subject of significant criticism. Companies will ultimately not do anything that will hurt their own profits. After all, CEOs have a fiduciary responsibility to their shareholders.

But in Washington, the normal tension between social responsibility and shareholder interests was temporarily suspended. In a high-stakes legislative battle, American companies have an opportunity to support legislation that will dramatically reduce child poverty while significantly reducing their own tax burdens.

So why are these 181 CEOs largely silent?

In late January, the House of Representatives overcame severe deadlock and passed the bill. Expand child tax credit (CTC) by a vote of 357-70.

Many Republicans who had previously been skeptical of the CTC supported the deal because it brought together an unusual number of conservatives: Newt Gingrich, Mike Huckabee, Rick Santorum and some major anti-abortion group — Expressed support for expansion. Republicans also supported the bill because it includes enhanced business tax credits for research and development activities and investments in new equipment.

This deal is a huge problem for struggling American families. CTC has proven to be the single most effective tool for lifting children out of poverty.meanwhile child poverty in america In 2018, it was 13.7%, but with the enactment of the CTC, the level dropped to 5.2% in 2021. In 2022, after the extended credit expires, that level returned to 12.4%.

The current proposal is smaller than the coronavirus-era program, but focuses squarely on the poorest families. Virtually all of the benefits of the proposed expansion would go to children whose families’ incomes are too low to currently access full credit.according to Estimate According to the Center on Budget and Policy Priorities, the proposal would lift at least 500,000 children above the poverty line and greatly benefit 16 million low-income families with children.

Business groups also say tax reform in the law, including 100% accelerated depreciation for immediate R&D and corporate capital investments, is needed to foster innovation, boost employment and help small businesses survive. strongly insists.And both the left and the right have supported this. Provisions to offset costs We amended this bill by changing the administration of the coronavirus-era business tax credit, which has been subject to massive fraud and abuse.

However, despite all this, the fate of the legislative package is currently uncertain.

On February 29, Senator Thom Tillis (R.N.C.), Ranking Member of the Senate Finance Committee, published The Wall Street Journal editorial broke with the majority of House Republicans who opposed the bill. Sen. Mike Crapo, ranking member of the Senate Finance Committee, has so far withheld support. Republican Leader Mitch McConnell has left it up to members of the Senate Finance Committee to allow the bill to pass.

Only the business community can muster the Republican support needed to ensure the success of CTC expansion. This is not just because we have the financial resources, but also because we have the ability to coordinate business leaders across the state to get the support we need.

on the other hand, National Manufacturers Association and business round table Although they have issued statements of support for the bill and engaged in some advocacy efforts, these efforts are small compared to the amount of money invested by business groups. lobbying blitz In preparation for the passage of the Trump tax cuts in 2017. While this may be expected given the broader tax reform stakes, there are important reasons for CEOs to significantly step up their efforts. Business tax changes will save private companies tens of billions of dollars. And with the 2017 tax cuts set to expire next year and the political makeup of the government in 2025 uncertain, there’s no guarantee that companies will have another chance at winning such a deal.

Beyond efforts to secure tax benefits, CEOs need to understand the potential benefits of leading to victory for millions of children and families enduring the stress and humiliation of poverty. Yes, this is good PR. However, expanding CTC will give more purchasing power to those who need it and boost business. Ultimately, ensuring the success of the CTC will prove the principle that corporations will vigorously pursue the public interest, at least when the interests of shareholders and stakeholders are aligned. .

Justin Talbot Zorn is a senior advisor at the Center for Economic Policy Research, a Truman National Security Fellow, and served as legislative director for three members of Congress..