Bipartisan tax bill fails to advance in Senate

With a final vote of 48-44 on Aug. 1, 2024, the Senate failed to invoke cloture, which would end debate and allow a final vote on the Tax Relief for American Families and Workers Act of 2024. This move effectively kills the tax bill that passed the House back in January with overwhelming bipartisan support. The measure contained several tax cuts popular with voters, including an expansion of the child tax credit as well as a trio of critical business tax provisions.

The bill languished in the Senate for months, where it faced opposition from several prominent Republicans including ranking Finance Committee Member Sen. Mike Crapo (R-ID). Sen. Crapo, along with other members of his party, wanted changes to certain provisions, primarily affecting the refundability of the child credit. Crapo has also stated he doesn't see a need to make large concessions, believing Senate Republicans will be in a better negotiating position after the election. Meanwhile, Senate Majority Leader Chuck Schumer (D - NY) pushed to keep the House-approved framework intact and has advocated for swift passage.

Sen. Schumer filed cloture on the tax bill earlier this week, which brought the bill up for a procedural vote. Schumer knew the bill was likely to fail. Bringing a bill to the floor with little chance of passage can be viewed as a political tactic, as it forces senators to vote on record. In this case, on key tax policy issues for both business and individual taxpayers. Not every lawmaker voted along party lines: three Republican senators voted in favor of ending debate on the bill, two independent senators voted against, eight senators did not vote and Schumer ultimately changed his vote to "nay" once he realized it would fail, giving him the ability to bring it up again at a later date.

With Congress recessed until October and the election taking place in under 100 days, there is no expectation of imminent negotiations on the contents of this bill. Instead, focus is shifting to the election, the results of which will have a substantial impact on the future of tax policy.

Please reach out to your Baker Tilly advisor with any questions on how tax policy decisions may impact your tax planning and compliance.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.