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Bennet, Romney offer compromise proposal amid year-end tax talks

Bennet, Romney offer compromise proposal amid year-end tax talks
© Greg Nash

Sens. Michael BennetMichael Farrand BennetTop Democrat pushes for tying unemployment insurance to economic conditions 50-50 Senate opens the door to solutions outlasting Trump's moment of violence Build trust in vaccines by investing in community workers MORE (D-Colo.) and Mitt RomneyWillard (Mitt) Mitt RomneyBiden's minimum wage push faces uphill battle with GOP GOP senators wrestle with purging Trump from party Impeachment trial tests Trump's grip on Senate GOP MORE (R-Utah) released a proposal on Sunday that's designed to be a compromise on issues that are being discussed as part of negotiations on a year-end tax package.

The senators' proposal includes an expansion of the child tax credit, a key priority for Democrats, and technical corrections to President TrumpDonald TrumpGiuliani used provisional ballot to vote in 2020 election, same method he disparaged in fighting to overturn results Trump gets lowest job approval rating in final days as president Fox News' DC managing editor Bill Sammon to retire MORE's 2017 tax-cut law, a top priority for Republicans.

It also would permanently repeal the medical device tax that was created by ObamaCare and is disliked by lawmakers on both sides of the aisle.

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Congressional leadership and the leaders of Congress's tax committees are currently scrambling to reach an agreement on a year-end tax package as soon as possible, and they may end up with an agreement that is less ambitious than the Romney-Bennet proposal. But the two senators hope that their proposal can help negotiators reach a deal.

“Congress is nearing another deadline without a clear plan to deal with dozens of fundamental responsibilities that the American people expect us to address,” Bennet and Romney said in a news release. “With its focus on helping families raising young children, protecting medical innovation for patients, and bringing certainty to workers and businesses, our plan should be considered on merit alone. And while the intent of our proposal is not to address every aspect of the current negotiations, we believe it is a compromise that can help clear a path forward and break the current logjam.”

Democrats and Republicans are aiming to have some type of tax package accompany government-funding legislation that is expected to be voted on this week. But it's unclear exactly what will be included in the package and whether any agreement will be reached.

Lawmakers and lobbyists have been pushing for their priorities to be a part of a deal, including the extension of expired and expiring tax breaks, a bipartisan retirement bill and the repeal of ObamaCare taxes. Democrats have also been pushing for an agreement to include expansions of tax credits benefiting low- and middle-income families, but Republicans have argued that those changes as too expensive. Republicans are hoping to include fixes to drafting errors in their 2017 tax law, but many Democrats have wanted technical fixes to the law to be paired with more substantive changes.

Bennet and Romney came together to offer a proposal that is designed to address some aspects of negotiations where Democrats and Republicans have struggled to find consensus. 

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The two senators are proposing to expand and reform the child tax credit for 2019 and 2020. They would create a new credit of up to $2,500 per child for children up to age six, and every eligible taxpayer under certain income levels would receive at least $1,500. The senators would also make reforms to the existing $2,000 child tax credit, which would apply to children between the ages of 6 and 17 under their proposal, including eliminating the current $1,400 limit on refundability and making the first $1,000 of the credit fully refundable regardless of taxpayers' income if a taxpayer is below the income threshold for which the credit phases out.

The senators also said their proposal would include the full suite of technical fixes needed to the 2017 tax law. One such correction that has been a priority for the Trump administration and a bipartisan group of lawmakers is to fix an apparent drafting error that is preventing retail stores and restaurants from being able to write off the full costs of their renovations in the year they are made.

Bennet and Romney floated several proposals to help fund their proposed tax changes, including a proposal to end the "stepped up basis" tax preference that reduces capital gains tax liability on investments passed on to heirs. The senators would allow for an exemption of $1.6 million for individuals and $3.7 million for spousal inheritances.

Bennet is running for the Democratic presidential nomination and is a member of the tax-writing Senate Finance Committee. Romney was the Republican presidential nominee in 2012.