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A Democratic proposal to expand 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’s aid, some are questioning whether 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 an article this week that “it is not a pro-family policy, no matter how much the Democrats claim it to be.”
The expansion of the child tax credit aims to reduce child poverty. The survey indicated 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 were as simple as handing a check to mothers and fathers, we would have solved poverty long ago,” wrote Rubio.
As with other direct payments, such as stimulus checks, the debate over how child tax credit is structured has focused on whether those who are suffering the most financially will actually benefit.
Some experts say the Democratic plan can also enrich those who are at the top of qualified income limits.
How Democrats’ Child Tax Credit Would Work
The tax credit for children helps parents, under certain income limits, to provide financially for their children.
Today, it reaches $ 2,000 per child for those who earn up to $ 400,000 if they are married and $ 200,000 if single.
As a tax credit, it allows parents to reduce their federal tax obligations. (This should not be confused with a deduction, which reduces the adjusted gross income.)
The House Democrats’ proposal, which was launched this week, calls for an increase in credit to $ 3,600 per child under 6 and $ 3,000 per child for those under 17.
The bill would make families opt for monthly payment, instead of waiting for a single installment 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 to 17 years old.
Eligibility for full payments would be based on income. Therefore, single parents with an adjusted gross income of up to $ 75,000, heads of households up to $ 112,500 and married couples up to $ 150,000 qualify.
Credit would be phased out for those earning above those levels, where it would be reduced and then stabilized at $ 2,000 per child. It would be limited to individuals with $ 200,000 in income and couples with $ 400,000, the same limits in effect for credit today.
“The idea is that the current $ 2,000 that people receive per child is still gradual in the same way,” said Steve Wamhoff, director of federal tax policy at the Institute of Taxation and Economic Policy.
Protecting credit for those earning up to $ 400,000 is also in line with Biden’s campaign promise not to raise taxes for people earning below that level of income.
Why low-income families would benefit
The legislation also aims to change the existing rules so that low-income families have access to credit.
To do this, it eliminates the minimum income requirement of $ 2,500 and makes the credit fully refundable. This would give access to families that currently receive no credit or a reduced credit.
“This represents a very big shift, I think, in the goal of what the credit was trying to do,” which is to help working families, said Garrett Watson, senior policy analyst at the Tax Foundation.
Estimates show that this change could place 9.9 million children almost or completely above the poverty level. Many of the children who would benefit would be Latino, African-American or Asian-American.
However, some conservatives have spoken out against the proposals.
Sen. Mike Lee, R-Utah, (left) and Sen. Marco Rubio, R-Fla., At a press conference on March 4, 2015 at Capitol Hill to present his proposal to revise the tax code.
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Rubio and Senator Mike Lee, R-Utah, issued a joint statement this month calling on Congress to expand the child tax credit without “undermining parents’ responsibility to work to support their families”.
“We do not support the transformation of the Child Tax Credit into what was called a ‘children’s allowance’, paid as a universal basic income for all parents,” said Rubio and Lee. “This is not a tax reduction for working parents; social assistance.”
Together, the senators put forward an alternative proposal to increase credit to $ 4,500 per child under 6 and $ 3,500 for older children. Work, however, would be a fundamental requirement of the plan.
However, other experts argue that the key point in the Democrats’ plan is to make money more accessible to families to help fight poverty. Therefore, linking the benefit to income would be counterproductive.
“Is the goal to reduce child poverty or not?” Wamhoff said. “And if that is the goal, you provide assistance to families with children. It is very simple.”
But since parents with the same income cap of $ 150,000 for couples can also receive stimulus payments of $ 1,400 for themselves and their children, many families can have a big payday if the current coronavirus relief package is okay.
In all, some families could qualify for up to $ 10,000 in direct payments, estimates Bill Hoagland, senior vice president at the Bipartisan Policy Center.
“I think we need to do something,” said Hoagland. “But I think there needs to be better direction and coordination here between direct payments and the child tax credit”.