House Republicans will revise their tax bill to keep the adoption tax credit previously slated for elimination, while also including provisions to sweeten the deal for small businesses.
The amendment offered Thursday in the Ways and Means Committee by Chairman Kevin Brady also would change the rules relating to the taxation of international business income.
Anti-abortion groups and lawmakers had raised objections to the elimination of the adoption tax credit.
"This will ensure that parents can continue to receive additional tax relief as they open their hearts and their homes to an adopted child," Brady said.
The original bill had included a special new top tax rate of 25 percent for businesses, such as sole proprietorships and partnerships, whose income flows straight through to their owners' tax returns. Small business groups had reacted coolly to the rules regarding that rate. Under Thursday's amendment, such businesses would be allowed to take advantage of a new 9 percent tax rate on their first $150,000, narrowing benefits to smaller companies rather than to big ones.
The National Federation of Independent Businesses, which previously had been cool to the bill, said in a statement they support the amendment. It "would create substantial tax relief for millions of small business owners who were left out of the original bill," said Juanita Duggan, the group's head.
Another key change would be to raise the rate charged on the estimated $2.6 trillion earnings that companies currently hold overseas. For cash, the rate would be 14 percent, rather than 12 percent. And for earnings reinvested overseas, the rate would be 7 percent rather than 5 percent.
Brady said the bill needed to be amended to raise revenue to limit the total net tax cut to $1.5 trillion. A bill losing more than $1.5 trillion would fall afoul of Senate rules allowing Republicans to pass legislation while avoiding a Democratic filibuster.
House Republicans are on the fourth day of marking up the bill in committee. Brady hopes to pass his bill Thursday to allow it to advance to the House floor next week.