When Congress returns in a few weeks, Republicans and Democrats will be focusing on a compromise to extend tax breaks for both low-income children and corporations — which would hand wins to both parties before year’s end but after the critical midterm elections.

Any deal would resolve a series of tax issues that each party has tried to address. Republicans have warned about damage to U.S. investment and innovation, while Democrats say they won’t vote for any business-tax incentives unless the child-tax credit is also addressed.
Success is seen hinging on the outcome of the November midterm election, with a resounding win for one party likely inhibiting compromise before the new Congress takes office. Passage could offer a marginal lift to households and companies next year just as the U.S. faces rising risks of a recession.
The GOP wants to extend an expansive tax break for research expenses, a writeoff for corporate-debt costs and a tax break letting companies deduct all their capital-expenditure costs in a single year.

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