Legislators are contemplating increasing the tax credit score for youngsters
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A Democratic proposal to extend the child tax credit for one year could earn qualified families up to $ 300 per child per month.
But like all government direct payments under Covid aid, some are asking whether the aid will be too much or too little.
One of the strongest objections to the Democrats’ proposal came from Senator Marco Rubio, R-Fla., Who wrote in a comment this week that it was “not a family-friendly policy, no matter how much Democrats ask.” be.”
The expansion of the child tax credit aims to reduce child poverty. Research has shown that President Joe Biden’s plan could help cut today’s rate in half, especially for minority families.
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Still others like Rubio are skeptical.
“If lifting families out of poverty had been as easy as giving mothers and fathers a check, we would have solved poverty long ago,” wrote Rubio.
As with other direct payments like stimulus checks, the debate over the structure of the child tax credit has centered on whether it really benefits those who are most financially injured.
Some experts say the Democratic Plan could also enrich those at the top of the skilled income thresholds.
How the Democratic Child Tax Credit Would Work
The tax credit for children helps parents with certain income thresholds to provide for their children financially.
Today it’s $ 2,000 per child for those who make up to $ 400,000 when married and $ 200,000 when single.
Because it’s a tax credit, parents can reduce their federal tax liability. (This is not to be confused with a deduction that lowers Adjusted Gross Income.)
The House Democrats’ proposal, released this week, is to increase the loan to $ 3,600 per child under 6 and $ 3,000 per child for children 17 and under.
The bill would make it so families could choose to receive monthly payments instead of having to wait for a flat rate at the end of the year. Families can receive up to $ 300 per month per child under 6 years old and $ 250 per month per child 6-17 years of age.
Entitlement to more extensive payments would depend on income. Single parents with Adjusted Gross Income up to $ 75,000, Heads of Households up to $ 112,500, and Married Couples filing up to $ 150,000 together would qualify.
The credit would expire for those earning above these levels where it would be reduced and then hit a plateau of $ 2,000 per child. It would be capped at $ 200,000 for individuals and $ 400,000 for couples, the same thresholds that apply to credit today.
“The idea is that the current $ 2,000 people receive per child is still declining the same way,” said Steve Wamhoff, director of federal tax policy at the Institute of Taxes and Economic Policy.
The protection of the loan for those earning up to $ 400,000 is also in line with Biden’s election promise not to impose taxes on anyone earning below that income level.
Why households with lower incomes would benefit from it
The legislation also aims to amend existing rules so that low-income families have access to the loan.
For this purpose, the minimum income requirement of $ 2,500 is waived and the credit is fully refundable. This would give access to families who are currently receiving no or reduced credit.
“I think that’s a pretty big change in terms of the goal of the loan,” said Garrett Watson, a senior policy analyst with the Tax Foundation.
It is estimated that such a change could bring 9.9 million children almost or entirely above the poverty line. Many of the children who would benefit from this would be Latinos, African American, or Asians.
However, some conservatives have spoken out against the proposals.
Senator Mike Lee, R-Utah (left) and Senator Marco Rubio, R-Fla., Presented their proposal for a tax review at a press conference on March 4, 2015 in Capitol Hill.
Rubio and Senator Mike Lee, R-Utah, released a joint statement this month calling on Congress to expand child tax credits without “undermining parents’ responsibility to work to provide for their families.”
“We do not support converting the child tax credit into what is known as child benefit, which is paid out to all parents as a universal basic income,” said Rubio and Lee. “This is not a tax break for working parents, but welfare.”
Together, the Senators put forward an alternative proposal to increase the loan to $ 4,500 per child under 6 and $ 3,500 for older children. However, work would be an important requirement under the plan.
Still other experts argue that the crux of the Democrats’ plan is to make the money more accessible to families in order to help fight poverty. It would therefore be counterproductive to link benefits to income.
“Is the goal to reduce child poverty or not?” Said Wamhoff. “And if that’s the goal, then give help to families with children. It’s pretty easy.”
With parents under the same income threshold of $ 150,000 for married couples also getting a full $ 1,400 in stimulus payments for them and their children, many families could have a heavy payday when the current coronavirus aid package goes through.
Overall, some families could qualify for direct payments of up to $ 10,000, estimates Bill Hoagland, senior vice president of the Bipartisan Policy Center.
“I think we have to do something,” said Hoagland. “But I think there needs to be better alignment and coordination here between the direct payments and the child tax credit.”