Child Tax Credit: Democrats’ $ 3,000 idea is to lift 4 million children out of poverty


The United States has one of the richest rates of child poverty in any rich country and one of the lowest rates of national spending on children and families. According to the latest data from the Census Bureau, roughly one in seven children live in poverty. More than a quarter of black children and one-fifth of Spanish children live below the poverty line.

When the Republican-led Congress under former President Bill Clinton established the child tax credit in 1997, very few low-income parents could claim it. This is because the $ 500 credit was not repaid and the federal income tax liability of these families was too low.

Then, as part of Republican tax cut legislation, it was doubled again in 2017 and the thresholds were broadened, bringing more households closer to the bottom and top of the income ladder. The changes were pushed for by Senator Marco Rubio, a Florida Republican, With the help of Donald Trump, daughter of former President, and counselor Ivanka Trump.

As a result, the child tax refund is currently up to $ 2,000 per child under 17,000. Single parents earning $ 200,000 and married couples earning up to $ 400,000 are eligible for full credit, which terminates after these thresholds.

The Center for Unbiased Tax Policy estimates that about 90% of families with children will receive an average of $ 2,380 in loans in 2020.

The credit, as well as the income tax credit for low- and middle-income working families, will help nearly 12 million children escape poverty or bring them closer to the poverty line, according to the center-left Center for Budgetary and Political Priorities.

Low-income families were left out

Nevertheless, 27 million children live in low-income families who receive no or no credit because they earn too little, according to the center. Parents must have an annual income of at least $ 2,500 to begin claiming benefits, but the amount they receive depends on their earnings.

“Right now, low-income kids get the least when they really should get the most,” said Chuck Marr, senior director of the center’s federal tax policy. – It would help them the best.

Democrats want to make three temporary but significant changes that were also part of Biden’s $ 1.9 trillion aid package.

The loan would increase to $ 3,600 per child under the age of 6 and $ 3,000 per child under the age of 6-17 for a single year, according to House legislation introduced Monday. The full incentive is available to single parents who earn up to $ 75,000 a year and couples ’incomes up to $ 150,000 before phasing out higher earners.

It would be fully refundable, so even the lowest income families would be eligible. And paying $ 300 a month for every toddler and $ 250 a month for parents — providing parents with a steady stream of income to pay rent, grocery shopping, and managing other expenses — is a typical way to tax households once a year instead of a lump sum.

That would lift more than 4 million children out of poverty and bring millions closer to the poverty line “in one fell swoop,” Marr said. “It gives millions of kids a better chance to take advantage of their opportunities.”

Rosa DeLauro (Connecticut), Suzan DelBene (Washington) and Ritchie Torres (New York) also introduced separate legislation on Monday that will continue the extended benefit on a permanent basis.

Republicans prefer the child tax credit

These provisions are unlikely to receive any Republican support because they are part of a larger aid package that democratic leaders will quickly follow through a process called conciliation, which will allow them to adopt it without GOP votes.

But some Republicans also support a review of the child tax credit. Utah Senator Mitt Romney last week unveiled a proposal to provide $ 350 a month in cash benefits for all young children ($ 4,200 a year) and $ 250 for all school-age children ($ 3,000 a year).

He said his plan lays the groundwork for “a strong national commitment to all of America’s families,” while promoting marriage, ensuring equal treatment for working and staying families, and reducing child poverty by up to a third.

For the disbursement of his $ 66 billion measure, which includes the earnings income tax credit, Romney would terminate a number of existing government support programs, including temporary support for families in need, and tax provisions, including state and local tax deductions.

Sam Hammond, who helped Romney draft his proposal, recently co-authored a report entitled “The Conservative Child Benefit Case” for the Niskanen Center, a centrist think tank where he is director of poverty and welfare policy.

The current child tax credit has not really been an effective anti-poverty tool because it excludes the least income households by design, he said.

General support for children would address both child poverty and family instability, said Hammond, who noted that the marriage rate has declined over the past four decades and the birth rate in 2019 reached its lowest level in 35 years. One reason for this is the rising cost of housing and childcare.

Because parents are not paid more than childless workers, they are at a disadvantage because they have to support dependents, Hammond said. The children’s monthly salaries equalize the conditions of competition.

Romney’s proposal is implemented through the Social Security Directorate, not the Revenue Service, to transfer benefits to a monthly allowance instead of a tax credit.

“It’s basically social security for children,” Hammond said.

But other Republicans, including Rubio and Senator Mike Lee of Utah, oppose the idea of ​​sending checks to parents, regardless of whether they have a job and earn an income.

“We do not support the child tax credit as a so-called ‘child allowance’, which is paid as a universal basic income to all parents. It is not a tax allowance for working parents, but a welfare allowance,” the senators said. in a joint statement last week.

“Working in addition to work is a vital part of being family-friendly. Congress should extend the child tax credit without subjecting parents to responsibility for caring for their families,” they said.