Child tax credit: Proposal calls for new monthly payments, but report cites ‘weaknesses’ in plan

0

(NEXSTAR) – Millions of families with children were able to benefit from the expanded child tax credit under last year’s pandemic relief bill, meaning they received a payment monthly up to $300 per child. Some lawmakers are now hoping to bring back those monthly child tax credit payments, despite concerns from a nonpartisan agency.

The child tax credit was expanded as part of President Joe Biden’s $1.9 trillion coronavirus relief package. Since the payments were first made in July 2021, about $93 billion in payments have been made to tens of millions of families, according to the Treasury.

A trio of senators — Mitt Romney (R-UT), Richard Burr (R-NC), and Steve Daines (R-MT) — recently proposed the Family Security Act 2.0 intended to provide some families with monthly checks, calling it a “pro-family, pro-life and pro-marriage.

Under the proposed plan, families would receive $350 per month for each child 5 and under, or $4,200 per year, and $250 per month for children ages 6 to 17, or $3,000 per year. Benefits would be limited to a maximum of six children each year, and families would need to earn $10,000 the previous year to qualify for full benefits.

Those earning less than $10,000 each year would receive a benefit commensurate with their earnings. For example, a family earning $5,000 would receive 50% of the maximum child tax credit, the CBPP explained.

The Center on Budget and Policy Priorities, a nonpartisan research and policy institute, called the Republican proposal a “welcome development” but noted that it “has significant weaknesses.”

“Specifically, while this would increase the credit for most children in low-income families, children in families with no income in a year would get no credit, while millions more children in low-income families very low income would only get partial credit, says a report from the institute. “And, low- and middle-income families are expected to pay much of its cost through a major reduction in the Earned Income Tax Credit (EITC) and other offsets, leaving millions of children in dire straits. worse than they would be without the Romney plan. .”

The report adds that the Family Safety Act 2.0 “falls short of the bailout expansion” of 2021 because it does not make “full credit available to families with little or no income”. The reduced EITC and “head of household” status are also major downsides to the plan, according to the CBPP.

The CBPP estimated that about 7 million families earning less than $50,000 would be worse off under the proposed plan than under the current law. This would affect approximately 10 million children. Overall, due to reductions in EITC and head of household status, if the proposed plan were approved, the average family could lose more than $800, CBPP reported.

Still, the institute welcomes the plan to phase in credit after the family earns its first dollar — not the $2,500 required by current law — and the elimination of the cap on the amount a family can receive reimbursement.

As it stands, there are no advanced monthly payments and families can receive $2,000 per child under 17, CNBC explains.

The Associated Press contributed to this report.


Source link

Share.

Comments are closed.