Bipartisan Proposal to Boost Child Tax Credit Gains Momentum

Introduction

A recent bipartisan proposal to enhance the child tax credit for parents is gaining traction and may receive the White House's approval. The legislation, called the Tax Relief for American Families and Workers Act of 2024, aims to provide relief to working families by increasing the refundable child tax credit. Democratic Senate Finance Chair Ron Wyden and Republican House Ways and Means Committee Chair Jason Smith announced their agreement on this tax proposal.

The Details of the Proposal

The Tax Relief for American Families and Workers Act of 2024 seeks to raise the refundable child tax credit over the next few years. Currently, the credit is limited to $1,600 per child. Under the proposed legislation, the credit would increase to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025.

The White House's View

Jared Bernstein, the chair of the White House Council of Economic Advisers, has expressed support for expanding the child tax credit. He mentioned that President Joe Biden is proud of the impact the child tax credit has had on families, as it was enhanced and made refundable through monthly checks in the American Rescue Plan. Bernstein stated that the White House would like to restore the child tax credit to its previous level in the American Rescue Plan. However, they have not reviewed all the details of the bipartisan proposal.

Bernstein highlighted that the proposal is paid for, which is crucial given the current economic situation. He emphasized the importance of helping hundreds of thousands of children escape poverty and reaching 16 million children with a fairer child tax credit.

The Impact of the Previous Child Tax Credit

The initial enhanced child tax credit in Biden's American Rescue Plan successfully lifted 3 million children out of poverty and provided food for 2 million children in its first month. However, when the credit expired at the end of 2021, child poverty rates increased. Families no longer had the additional financial support to help themselves and their children.

The Proposal's Additional Adjustments

In addition to increasing the child tax credit, the proposal suggests adjusting the $2,000 cap for inflation in tax years 2024 and 2025. This adjustment would be rounded down to the nearest $100. Furthermore, the legislation allows the credit to be calculated on a per-child basis.

Potential Impact on Child Poverty

The left-leaning Center on Budget and Policy Priorities conducted an analysis and found that the proposal could lift 400,000 children above the poverty line in its first year alone. By the time the proposal is fully implemented, it estimates that it could impact 500,000 children. Additionally, within the first year, 16 million children in low-income households could benefit from the expanded credit.

The White House's Commitment

The White House remains committed to fighting for the full expanded child tax credit. President Biden is proud of the impact the expanded credit had on reducing child poverty and providing relief to millions of families. The White House appreciates the efforts of Chairman Wyden and Chairman Smith in increasing the child tax credit and supporting affordable housing initiatives. They look forward to reviewing the complete details of the bipartisan agreement.

Support from Lawmakers

While it is uncertain whether the legislation has enough support to pass both chambers of Congress, lawmakers from both sides of the aisle believe that the provisions are necessary to provide relief to American families. Democratic Sen. Sherrod Brown stated that the expansion of the child tax credit will help parents cope with the rising cost of living and ensure that their hard work pays off. GOP Sen. Mike Crapo expressed openness to appropriate child tax credit provisions but emphasized the importance of reviewing the details.

Other Proposals in the Legislation

Apart from the child tax credit provisions, the bipartisan group of lawmakers is proposing other measures. These include expanding businesses' abilities to expense research and development projects, boosting disaster tax relief for families, and enhancing the low-income housing tax credit.

In conclusion, the bipartisan proposal to boost the child tax credit for parents is gaining momentum. With the potential to lift millions of children out of poverty and provide relief to working families, the proposal has garnered support from both the White House and lawmakers. As the details of the legislation are reviewed, it remains to be seen whether it will pass both chambers of Congress and become law.—————————————————————————————————————————————
By: asheffey@businessinsider.com (Ayelet Sheffey,Juliana Kaplan)
Title: Bipartisan Proposal to Boost Child Tax Credit Gains Momentum
Sourced From: www.businessinsider.com/child-tax-credit-boost-bipartisan-plan-lift-kids-from-poverty-2024-1
Published Date: Wed, 17 Jan 2024 20:49:07 +0000