2023 proved to be a difficult year for the United States economy, but it is possible that up to $70 billion in commercial and personal tax breaks could give it a most welcome shot in the arm.
At present, the House of Representatives is in the process of wrangling over the renewal of recently expired tax breaks for businesses, along with an increase in child tax credits per household. Congress hopes to split the budget evenly between the two – a possibility dampened by a Lower House split by the Republicans’ demand for greater cuts in government spending.
According to arguments by Republican members of the House, such cuts are necessary to keep the government from shutting down on Friday, January 19th, and Monday, January 22nd, as temporary funding is set to expire on those dates.
Effects and Consequences
Should these tax breaks be approved, families can receive payouts as early as March. Such breaks are also expected to increase consumer spending and further speed up the country’s economic growth.
However, approving such breaks also comes with consequences. Analysts point out that these could again drive inflation pressure, thus throwing a wrench into any plans on the part of the Federal Reserve to lower interest rates within the year.
At the same time, Senior Policy Director Marc Goldwein of the Committee for a Responsible Federal Budget opines that approving the tax breaks, particularly for the corporate and commercial sectors, will do little to boost investments.
Despite this grim prognosis, it is seen as a boon for American families that have been struggling for the past couple of years. According to Lael Brainard, director of the National Economic Council, a balanced tax break package – particularly one that extends or increases tax credits per child in a household – would be a great help in reducing poverty, especially among families in the low and middle-income brackets.