Congress has a lot on its plate before it takes yet another recess, with a host of spending and budget items to push through. One proposal, the “Tax Relief for American Families and Workers Act of 2024”(H.R. 7024), in title and political spin, promises financial assistance to American households in this high-inflation and uncertain economic time by expanding the popular Child Tax Credit. The bill should really be called the “Big Tech Bonanza Act.”
Under the proposal, a single mother of two children would receive an additional $1575 in tax credits per year. Based on the figures released by Congress and analyzed by the Center for Budget and Policy Priorities, an additional 16,000,000 children would benefit at an annual cost of about $20 billion. But as with so much in Washington special interest deal-making, that figure pales in comparison to Big Tech’s windfall in the bill.
Under the deal negotiated by Senate Finance Chair Ron Wyden (D-Ore), a great friend to Big Tech, and House Ways and Means Chair, Jason Smith (R-Mo), H.R. 7024 includes a host of corporate tax breaks for R&D and new equipment investments that the so-called “Magnificent 7” tech companies had been pushing. Apple, Meta, Alphabet, Microsoft, Nvidia, Tesla and Amazon, among others stand to recoup $2 trillion in savings on their tax bill. That’s a 100-times greater tax break compared to the “deal” American families might get.
Look, don’t get me wrong. I am all in favor of lowering taxes and providing savings to entrepreneurs, small businesses and individuals who pay their fair share of taxes in America. The more money that we can keep in our pockets and spur real economic growth and opportunity the better. But Congress, lobbyists and the media are not being honest with the American taxpayer about what H.R. 7024 does and does not do for people across the country that may need a financial break.
For example, should the Senate pass H.R. 7024, it would eliminate the pandemic-era Employee Retention Credit (ERC) which allowed businesses to gain as much as $26,000 in savings per employee, particularly if the businesses re-invested those funds in their business.
Were Congress to simply allow the ERC application requirement to expire on April 15, 2025 as planned, it would add an estimated $1 trillion in refunds to all qualified or-profit and non-profit entities nationwide. If Capitol Hill includes a simple, clean expansion of the Child Tax Credit, it would gain the American taxpayer almost $1 trillion in savings on America’s national debt while helping more American businesses and working families than the current version of H.R. 7024 might.
Creating financial incentives at the federal, state and local levels for businesses can have positive effects on those economies, from job creation, higher wages (and increased tax revenue) and corporate investment for equipment and business operations. But the Congressional Research Service recently found that the latest round of corporate tax breaks put in place in 2017 have achieved few such benefits for the U.S. economy or American taxpayer. Meanwhile, the tech companies that would greatly profit from H.R. 7024 are in the midst of the largest cutting of jobs seen in that industry since the dot.com crash of 2001, cuts that would not necessarily be saved H.R. R&D and equipment bonus depreciation tax credits.
Our nation’s national debt now stands at almost $35 trillion. Thanks to higher interest rates and a weak U.S. economy, the annual debt service for this debt is almost $1 trillion, more than we pay for our national defense, and at some point, unless serious cuts in federal spending are made, debt service will encompass our federal healthcare spend. In short, our federal spending – including tax cuts and credits that neither increase federal revenue nor spur true economic growth – is unhelpful and unsustainable.
With inflation and prices for basic household needs like groceries and gas remaining high, providing some financial relief to American households, particularly those hovering around the poverty line is a necessary priority. But the cost of helping our fellow citizens should not come at the expense of the American taxpayer with a $2 trillion windfall for Big Tech.
