Lawmakers value the new expansion of the child tax credit

A democratic proposal to extend the child tax credit for one year could give qualified families up to $ 300 per child a month.

But like all direct payments made by the government as part of Covid’s relief, some question whether the aid will be too much or too small.

One of the strongest objections to the Democrats ’proposal was from Senator Marco Rubio, R-Fla., Who wrote in an opinion this week that“ it’s not a pro-family policy, no matter how much Democrats claim it to be. “

The expansion of the child tax credit aims to reduce child poverty. Research has indicated that President Joe Biden’s plan could help cut the current rate by half, especially for minority families.

More information on personal finance:
Unemployment benefits: what Democrats want in a stimulus package
Meet student loan borrowers who refuse to pay off their debts
Obamacare exchanges reopen on Monday. How to get a low cost plan

Still, others like Rubio are skeptical.

“If getting families out of poverty was as simple as handing over a check to moms and dads, it’s been a long time since we would have solved poverty,” Rubio wrote.

As with other direct payments, such as stimulus checks, the debate over how the child tax credit is structured has focused on whether those who suffer most financially will really benefit.

Some experts say the Democratic plan could also enrich those at the top of the qualifying income thresholds.

The child tax credit helps parents who have certain income thresholds provide financially for their children.

Today it is $ 2,000 per child for those earning up to $ 400,000 if they are married and $ 200,000 if they are single.

Because it is a tax credit, it allows parents to reduce their federal tax liability. (This should not be confused with a deduction, which reduces adjusted gross income).

The House Democrats proposal, released this week, calls for the credit to be increased to $ 3,600 per child under 6 and $ 3,000 per child for children under 17 included.

The bill would allow families to choose to receive monthly payments, rather than having to wait for a lump sum at the end of the year. Families could receive up to $ 300 a month for every child under 6 and $ 250 a month for every child between the ages of 6 and 17.

Eligibility for fuller payments would be based on income. Thus, single parents with adjusted gross incomes of up to $ 75,000, heads of households up to $ 112,500, and married couples who jointly filed up to $ 150,000 would be eligible.

Credit would be phased out for those who exceeded these levels, where it would be reduced and then set at $ 2,000 per child. It would be limited to people with incomes of $ 200,000 and couples with $ 400,000, the same thresholds as the current credit.

“The idea is that the current $ 2,000 that people get per child is still disposed of in the same way,” said Steve Wamhoff, director of federal tax policy at the Institute for Taxation and Economic Policy.

Credit protection for those earning up to $ 400,000 is also in line with Biden’s campaign promise not to raise taxes for people earning that income level.

The legislation also aims to change existing rules so that lower-income families can access credit.

To do so, it removes the $ 2,500 minimum income requirement and makes the credit fully repayable. This would give access to families who currently do not receive any credit or reduced credit.

“I think that’s a pretty big change in the purpose of what the credit was trying to do,” which is to help working families, said Garrett Watson, a senior tax analyst at the Tax Foundation.

According to estimates, this change could raise 9.9 million children almost or completely above the poverty level. Many of the children who would benefit would be Latinos, African Americans or Asian Americans.

However, some conservatives have spoken out against the proposals.

Rubio and Sen. Mike Lee of R-Utah issued a joint statement this month calling on Congress to expand the children’s tax credit without “subjecting parents to the responsibility of working to provide for their families.”

“We don’t support converting the child tax credit into what has been called a‘ child allowance ’paid as universal basic income to all parents,” Rubio and Lee said. “This is not a tax cut for working parents; it’s welfare assistance.”

Together, senators have tabled an alternative proposal to increase credit to $ 4,500 for under-6s and $ 3,500 for older children. Work, however, would be a key requirement of the plan.

However, other experts argue that the key point of the Democrats’ plan is to make money more accessible to families to help fight poverty. Therefore, linking profit to income would be counterproductive.

“Is the goal to reduce child poverty or not?” Wamhoff said. “And if that’s the goal, give help to families with children. It’s pretty simple.”

But because parents with the same $ 150,000 income threshold for married couples can also get $ 1,400 in incentives for them and their children, many families could enjoy a great payday if they ‘gets the current coronavirus relief package.

Altogether, some families could benefit from up to $ 10,000 in direct payments, estimates Bill Hoagland, senior vice president of the Bipartisan Policy Center.

“I think we need to do something,” Hoagland said. “But I think there needs to be better guidance and coordination between direct payments and the child tax credit.”