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Business fumes as Democrats blast GOP for blocking corporate tax credits

Senate Democrats say Senate Republicans are blocking an expansion of the child tax credit and a package of corporate tax credits, despite business groups’ urging to pass the bills, because they want to thwart President Biden’s legislative victories five months before Election Day.

It is the second time this year that a rift has emerged between Republican senators and Washington’s two biggest business groups, the U.S. Chamber of Commerce and the Business Roundtable, over the presidential election.

Earlier this year, Republican senators overwhelmingly blocked a bipartisan border security deal that was supported by the U.S. Chamber of Commerce and praised by the Business Roundtable, the National Border Patrol Council and the Wall Street Journal’s editorial page after former President Trump told allies in Congress that he didn’t want to give Biden a win on border security.

Democrats say Republicans are once again blocking a major bipartisan effort to help President Trump.

“The business community still really wants that, we still really want that. This is all election politics, they don’t want to give Biden the win. That’s 100 percent reality,” said the ranking Democrat in the Senate Republican Party who opposes the House-passed American Families and Workers Tax Cuts of 2024.

The senator said Senate Democrats are stepping up efforts to break through the Senate Republican blockade.

“We are trying hard and there is no real reason for them to be opposed,” the source said.

The bill would restore corporate research and development spending that expired in 2022.

The U.S. Chamber of Commerce has urged the Senate to approve the bill, which the House passed in late January, warning that if research and development spending is not retroactively reinstated, it will “cause irreparable harm to American innovation and competitiveness.”

The Business Roundtable also urged the Senate “to approve this important legislation and send it to the President’s desk.”

Joshua Bolten, CEO of the Business Roundtable, said the bill would “stimulate domestic business investment, create American jobs, and strengthen America’s competitiveness.”

The bill also includes an expansion of the child tax credit to help low-income families keep up with inflation and tax cuts for victims of natural and man-made disasters, such as the 2023 toxic train derailment in East Palestine, Ohio.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) said he agreed with his Democratic colleagues that Republican senators blocked the tax bill to thwart Biden’s legislative victories and thereby improve Trump’s chances of a victory.

“There’s no question about it. They’ve said that from the beginning,” Wyden told The Hill.

Sen. Chuck Grassley of Iowa, the ranking Republican on the Senate Finance Committee, told reporters earlier this year that Senate Republicans were not interested in “making Biden look good” to improve his reelection chances.

They also expressed concern that Biden’s reelection would eliminate the possibility of renewing President Trump’s 2017 tax cuts, which are set to expire at the end of next year.

“Passing a tax bill that makes the president look good and then sending out checks in the mail before the election means he gets re-elected and doesn’t extend the 2017 tax cuts,” Sen. Grassley told Semaphore on the day the House passed the tax bill.

For Democrats, this is an echo of what happened to the bipartisan border security agreement negotiated between Sens. Chris Murphy (D-Conn.), Kyrsten Sinema (Independent-Arizona) and James Lankford (R-Okla.) and the White House.

President Trump urged his Senate allies to kill the bill in an attempt to block Biden’s victory, but in the end only four Republican senators voted in favor of it.

Wyden and House Ways and Means Committee Chairman Jason Smith (R-Missouri) crafted a stalled $79 billion tax reform bill that passed the House overwhelmingly, 357-70.

It would restore Section 174 expense recognition for research and development investments and 100 percent “bonus” depreciation, which allows companies to deduct more depreciation expenses than would normally be allowed.

It also includes a Low-Income Housing Tax Credit to increase the supply of affordable housing.

The measure would be funded almost entirely by accelerating the deadline for retroactively claiming pandemic-related employee retention tax credits, according to PwC’s analysis.

Amanda Critchfield, a spokeswoman for Sen. Mike Crapo of Idaho, the Finance Committee’s top Republican, said her boss “fully supports extending the pro-growth provisions” and “also supports expanding the child tax credit to provide additional tax relief for working families.”

But she said Crapo, like other Republicans, “has policy concerns about the current bill and has made clear he wants to find a compromise that a majority of Republican senators can support.”

A tax lobbyist familiar with the effort to pass the bill said the business community has stepped up its lobbying efforts against Senate Republicans.

“The Chamber of Commerce and other business groups strongly support the bill and are lobbying locally,” the source said. “The business community is stepping up their efforts, complaining that the lapse and expensed bill of 174 is causing real, tangible economic harm. Companies are lobbying at a grassroots level across the country, and it’s starting to make waves.”

“The business world is upping the ante,” the source said.

Watson McLeish, senior vice president for tax policy at the U.S. Chamber of Commerce, warned in a statement Monday that the Senate’s failure to pass tax reform puts a strain on employers.

“As the tax extension bill remains stalled in the Senate, some small businesses are being forced to take out high-interest loans, raise prices, downsize and even lay off staff just to survive and pay their taxes,” McLeish said. “We urge the Senate to take up this bill immediately after the Fourth of July recess and send it to the President’s desk to be signed into law.”

A Senate Republican aide said Senate GOP leaders are deferring to Crapo on how to handle the issue, and that Crapo may want to hold off on action on the expiring tax cuts until after the election, which will tell Republicans whether they control the Senate in 2025.

Some Republican senators believe they could get better terms for extending the expired provisions if they control the White House and the Senate, but waiting until after the election is risky because Democrats could keep the White House and regain control of the House of Representatives.

Senate Majority Leader Chuck Schumer, a New York Democrat, told reporters earlier this month that he wanted to bring the bill to the floor if he could get more support from Senate Republicans.

“I supported it from the moment it was announced. I think it’s a good bill. I’m very proud of the work I did to get the low-income housing tax credit in the bill,” Schumer told reporters last week. “I’m working with Chairman Wyden right now to get this done. This bill is not dead.”