Ivanka Trump's Proposed Child Tax Credit Wouldn't Help Poor Families
In the Senate’s revised version of the GOP tax plan released Tuesday, Ivanka Trump’s goal of expanding the child tax credit was put on the table. She has argued that giving more money to parents in the form of a tax credit helps them “afford the costs of raising and caring for their children.” But in the latest version of the tax plan, the credit does not seem to help lower-income families.
Put it this way. A single mother with two children working full time at the minimum wage would only get $75 more under the proposal, as calculations from the Center on Budget and Policy Priorities show. But Sen. Marco Rubio (R-FL), who along with his wife earned $335,963 in 2014 according to their tax return, would get a more than $2,200 cut.
Again: Marco Rubio would gain nearly 30 times more than a single mother in working poverty. He even gets a bigger benefit in percentage terms.
This situation arises from two problems with the proposal. One, it does little or nothing to increase “refundability,” which enables the child credit to help poor families who don’t earn enough to pay income taxes. Two, the proposal would dramatically expand access to the credit for families making six figures, including many members of Congress.
According to a report by the Center for Budget and Policy Priorities, a progressive think tank:
Under the revised proposal, a single mother with two children working full time at the minimum wage would still get just a $75 increase in her credit, as under the prior proposal, while a family with two children and $500,000 in earnings would get a $4,000 credit—up from $3,300 under the prior proposal (see Figure 1) and from $0 under current law. Some 10 million children in working families would get a $75 increase or less. And even this meager increase would be temporary, because the entire CTC increase—as well as the bill’s other individual income tax cuts—would end after 2025.
Because the credit is only partially refundable, a family can’t get back the full amount of the credit in cash just for filing taxes—some of the credit is applied against what the family owes in federal income taxes. Under the Senate GOP plan, there’s a cap on that refundable portion of the tax credit: It can reach just $1,000, adjusted for inflation. The report also estimates that about 16 million additional children under age 17 in low-income working families would get more than $75 but less than the full $1,000-per-child increase, and that the revised bill would hurt low- and moderate-income families even more than the GOP’s original bill, leaving 13 million Americans uninsured and forcing millions more to pay higher premiums.
In the even worse new version of the Senate #GOPTaxBill it would permanently change the tax code so that it would raise taxes on many low- & middle-income people: https://t.co/7M6qTZlyLxpic.twitter.com/MAvR8BdD3A
— Center on Budget (@CenterOnBudget) November 16, 2017
Vox suggests that there is a simple way to make the tax code more fair:
Sens. Michael Bennet (D-CO) and Sherrod Brown (D-OH) have introduced a fantastic bill that would increase the child credit to $3,000 per year, and $3,600 per year for children under 6. They would not expand access for the rich, but they’d make it fully refundable, without any complicated phase-in, and pay out monthly so families don’t have to wait for their tax refund to benefit.
Rubio and Gardner would gain $0 under the Bennet-Brown plan. That mother of four working part time at minimum wage? She’d see her benefit increase from $637.50 to at least $12,000, or as much as $14,400 if her kids are all young. She and her children would be lifted out of poverty.
Sens. Bennet, Brown and Bob Casey are introducing another, more limited form of the legislation—as an amendment to the tax bill—which would raise the phase-in rate to 45 percent from 15 percent, increase the credit amounts to $2,500 for children ages 6 to 18 and $3,000 for kids under 6, and start phaseout at $313,800 for married taxpayers filing jointly. It would also make the credit refundable and increase the earned income tax credit for people without children, significantly increasing benefits to poor and middle-class families.