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The Rescue Act made historic expansions to the Child Tax Credit & EITC. The new Biden plan takes 3 important steps forward but Congress needs to make these expansions permanent – this year! – to lock-in a landmark achievement to reduce child poverty. #EquitableRecovery
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The American Rescue Act expanded the #ChildTaxCredit enough to reduce child poverty by more than 40 percent – but poverty will snap back unless the Congress acts this year. http://bit.ly/3dY7m4r
The Biden plan takes three important steps (but Congress will need to take one more).
Step #1 of the new Biden Plan: It extends the increase in the amount of the Child Tax Credit (to $3k or $3,600 per child) through 2025. This means 4.1M children will continue to be lifted out of poverty each year over this period.
Step #2 of the Biden Plan: It makes the EITC expansion permanent - 17M childless adults working in low paid jobs will benefit and assures that federal tax code won’t ever tax childless adults into or deeper into poverty.
Step #3 of the Biden Plan: Makes permanent the provision that ensures that poor and low-income children get the full Child Tax Credit without having to meet a minimum earnings test.
Under the Biden plan, the Child Tax Credit “snaps back” to $1k per child starting in 2026 (where it stands under current law starting that year), leaving the fate of the full expansion to a future Congress.
That’s why Congress needs to take Step 4 and make the full Child Tax Credit expansion (and the EITC expansion) permanent – this year. Yesterday it was great to see Chairman Neal propose to do just that. http://bit.ly/2SatXSS
Top researchers @HilaryHoynes, @dwschanz, @kearney_melissa make it clear here that this is a permanent investment we can’t afford not to make. Read and click the links to see the benefits of expansion on health, education, & future wages. http://bit.ly/3vv5OEZ
And, we, the wealthiest country in the world, *can* afford this investment in children. We will have a paper soon laying out some initial options on how the Congress can finance this investment but a few points to keep in mind below.
Under the rules of budget reconciliation, the requirement is that any permanent provisions are fully paid for in the years outside of the usual 10-year budget window.
Recall the Administration initially paired the permanent partial reversal of the 2017 corporate tax cut with the temporary infrastructure investment proposal. This means that there may be some out-year revenue available to help pay to make the Child Tax Credit expansion permanent
& President Biden left plenty of good, progressive revenue offsets on the table to finish the job, including on passthroughs, the estate tax, and the tax treatment of stock buybacks.
Our upcoming paper goes into more detail, but these proposals would ask the wealthy to pay a fairer amount of tax to help finance a landmark achievement in reducing child poverty. Policymakers can and should do this. Permanently. More soon.
