Legislators weigh new tax credit extension for children

A Democratic proposal to extend the child tax credit for one year could give eligible families up to $ 300 per child per month.

But like all direct payments made by the government as part of Covid relief, some question whether the aid will be too much or too little.

One of the strongest objections to the Democrats’ proposal comes from Senator Marco Rubio, R-Fla. to be. “

The expansion of child tax breaks is aimed at reducing child poverty. Research has shown that President Joe Biden’s plan could help lower the rate today by half, especially for minority families.

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Yet others like Rubio are skeptical.

“If it were as simple to pull families out of poverty as to give moms and dads a check, our poverty would have been solved long ago,” Rubio wrote.

As with other direct payments, such as stimulus checks, the debate over how the child tax credit is structured has focused on the question of whether those who are most financially disadvantaged will really benefit from it.

Some experts believe that the Democratic plan can enrich those who are above the qualifying income thresholds.

The child tax credit helps parents below certain income thresholds to provide for their children financially.

Today, it amounts to $ 2,000 per child for those who earn up to $ 400,000 if they are married and $ 200,000 if they are single.

Because it is a tax credit, it can reduce their federal tax liability. (This should not be confused with a deduction that reduces the adjusted gross income.)

The House Democrats’ proposal, released this week, calls for the credit to be increased to $ 3,600 per child under the age of 6, and $ 3,000 per child for those up to the age of 17.

The bill makes it so that families can choose to receive monthly payments, instead of waiting for one lump sum at the end of the year. Families can receive up to $ 300 per month per child under 6 and $ 250 per month per child from 6 to 17 years.

Eligibility for fuller payments will be based on income. Thus, single parents with an adjusted gross income of up to $ 75,000, housekeepers with up to $ 112,500 and married couples who jointly submit up to $ 150,000 may qualify.

The credit will phase out for those earning above these levels, where it will be reduced and then a plateau of $ 2,000 per child. It will be limited to individuals with $ 200,000 income and couples with $ 400,000, the same thresholds for credit today.

“The idea is that the current $ 2,000 that people get per child is still going up in the same way,” said Steve Wamhoff, director of federal tax policy at the Institute for Taxation and Economic Policy.

Protecting credit for those earning up to $ 400,000 is also in line with Biden’s promise not to raise taxes for people earning below that level of income.

The legislation is also aimed at changing existing rules so that lower-income families can access the credit.

Doing so eliminates the required minimum income of $ 2500 and makes the credit fully repayable. It gives access to families who currently do not receive any credit or a reduced credit.

“It’s a pretty big shift, I think, in terms of what the credit is trying to do,” which helps working families, “said Garrett Watson, a senior policy analyst at the Tax Foundation.

According to estimates, such a change could raise 9.9 million children almost or completely above the poverty level. Many of the children who benefit from it are Latino, African American or Asian American.

Yet some conservatives have spoken out against the proposals.

Rubio and Senator Mike Lee, R-Utah, issued a joint statement this month calling on Congress to extend the child tax credit without taking on the parents’ responsibility to take care of their families.

“We do not support the conversion of the child tax credit into ‘so-called’ child allowance ‘which is paid out as universal basic income to all parents,” Rubio and Lee said. “It is not tax relief for working parents; it is a well-being aid. “

Together, the senators submitted an alternative proposal to increase the credit to $ 4,500 per child under 6, and $ 3,500 for older children. However, work is an important requirement in the plan.

Another expert argues that the most important point of the Democrats’ plan is to make the money more accessible to families to fight poverty. Linking the benefit to income would therefore be counterproductive.

“Is the goal to reduce child poverty or not?” Wamhoff said. ‘And if that’s the goal, give help to families with children. It’s pretty straightforward. ‘

But since parents below the same income threshold of $ 150,000 for couples also get $ 1400 stimulus payments for both them and their children, many families can get a big payday if the current coronavirus relief package goes through.

Altogether, some families may be eligible for as much as $ 10,000 in direct payments, estimates Bill Hoagland, senior vice president at the Bipartisan Policy Center.

“I think we need to do something,” Hoagland said. “But I think there needs to be better focus and coordination between the direct payments and the child tax credit.”