The Senate is contemplating a $78 billion expanded version of the Federal Child Tax Credit, which could provide some economic stability to an estimated 19 million low-income children.
The House passed the bi-partisan bill — known as the Tax Relief for American Families and Workers Act of 2024 — last week on a 375-60 vote. In the Senate, the bill is being sponsored by Senate Finance Committee Chairman Ron Wyden, D-Oregon, who with House Ways and Means Committee Chairman Jason Smith, R-Missouri, structured the proposed plan.
The proposal needs 60 votes to pass in the Senate. Several Republican senators have already expressed their opposition. Contrary to some of their concerns, however, the proposed measure does not benefit US citizen children with undocumented parents, even those with Individual Taxpayer Identification Numbers.
In an interview with Ethnic Media Services, Chuck Marr, Vice President for Federal Tax Policy at the Center on Budget and Policy Priorities, explained the expanded credit and its importance in lifting millions of children out of poverty.
EMS: Could you explain the provisions of the measure?
Chuck Marr: The Child Tax Credit has been around for a few decades, and over time, and it’s fully available to middle-class and higher-income families.
But we still have 19 million children whose parents work for low wages. And because their earnings are not high enough, they do not get the full child tax credit. So 19 million kids, the kids who stand to benefit the most, actually get the least.
The child tax credit right now is basically upside down. And it needs to be turned right side up. And so this bill makes good progress. It It doesn’t fix everything, but it makes real progress.
Even with this small package, you’re helping 1 in 3 black children, 1 out of 3 Latino children, and 1 in 7 Asian American and White children.
EMS: So how does this work?
CM: It moves low-income families to a per child phase in, which is so important. Right now, throughout the population, 70 percent of kids live in families with two or more children. So this is a really big benefit. And then also the special lower cap for low-income families, this gets rid of that. So those are two big changes.
And then there’s a third piece, which is very important. Low-income people who work in low-wage jobs don’t tend to get sick days. They don’t get leave when their elderly parent gets sick. Higher income people, middle-class people, they tell their employer: ‘You know, I got to take a couple of weeks off here. I got to help out.’ Low income people, they get fired for doing things like that.
Three Big Changes
So this bill says, OK, a low income person goes to file their taxes. Last year, they worked quite a bit. This year they’re working less. Maybe someone had a baby. Right. Maybe they’re caring for an elderly parent. Maybe their hours were cut.
So they get to take a choice. They would choose between this year’s earnings, or last year’s, to calculate their child tax credit.
Those are really the three big changes. And again, it’s that per child that’s the major driver. If you have a single mom who makes, she has a toddler and a second grader, right? She works as a home health aide part-time around her kids’ school schedules. And she makes $15,000. Right now, she gets about $1,800 in child tax credit, right, far below the $4,000 that a higher income family would get. So with this bill, she’s going to get another $1,700. So not quite to $4,000, but to $3,600.
(Editor’s note: the maximum cap on the child tax credit is $2,000 per child per year, regardless of income)
EMS: For low-income families, why is this being offered as a credit at the end of the year, rather than a direct subsidy, which could help a lot of families month by month?
CM: If you think back during the pandemic, that one year where there really was a major expansion, child poverty was cut in half. That’s what we need to get back to. You know, that was just historic. And it’s so sad that that expired. That was when they when they went month to month. And that really helped provide stability for families. Something goes wrong. You still can help pay your bills.
This proposal does not do that. This is 1/12 of the size of the pandemic package.
I think the idea here is that let’s do what we can now in this package. And then in 2025, when all the Trump tax cuts expire, let’s try to block the tax cuts for the highest income people. And let’s try to go back to that really large expansion of the child tax credit, including that monthly delivery.
EMS: This is being framed as a bi-partisan bill. Would you agree with that framing?
CM: You wish that both sides would just want to help low-income children. But sadly, that’s not the case. So this is a trade, where Republicans are pushing for a series of corporate tax breaks. And then Democrats pushing more for the child tax credit. And it’s a negotiated settlement: a dollar of corporate for a dollar of helping low-income children.
Some from the far right are raising issues of of what the effect on work would be. And I think that’s very silly. I mean, the idea that a single mom who’s working is going to give up a job that pays $25,000 a year just so she can keep $2,000 is ridiculous to me.
This bill is intended to deal with the volatility of earnings and life circumstances. People have children. Their parents get sick. It helps provide some stability.
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