$3,000/$3,600 child tax credit: who has supported this policy?

One element of the American Rescue Plan, President Biden’s $1.9 trillion coronavirus relief package, would provide a financial boost to American families. The expansion of the child tax credit would temporarily increase the amount and make it fully refundable. It would also allow more families to claim it increasing the number of children eligible by 27 million.

The measure is also part of Biden’s plan to help struggling families deal with the burden of raising children during the covid-19 pandemic. In part to tackle the unequal way the economic hardships have fallen on families across the country.

What is happening with the Child Tax Credit?

Congressional Democrats are moving forward to make Biden’s child tax credit expansion a reality. All but one Senate Democrat favors the proposal. Congressional Republicans are opposed due to the price tag of the measure. A group of 10 GOP Senators presented a counter proposal to the White House that didn’t include the child tax credit expansion.

Some Republicans however may be onboard with the expansion, during negotiations for the 2017 Tax Cut and Jobs Act Senators Marco Rubio and Mike Lee favored expanding the credit. Under that tax reform the credit was temporarily doubled to $2,000 from 2018 to 2025. Mike Lee called for making expanded child tax credits permanent in a tweet on Monday.

Child tax credit

The current proposal mirrors legislation written by Senators Michael Bennet and Sherrod Brown in the American Family Act of 2019. Under Biden’s proposal the annual child tax credit would temporarily increase from $2,000 to $3,000 per child 17 and under with an additional $600 for each child under age six.

It would expand eligibility to all low-income families by removing an earnings floor in the current child tax credit of $2,500. This would allow those families to claim the full credit even if it exceeds their income tax bill. This would make it fully refundable so that those families would receive the credit as a refund.

For higher income families, the credit begins to phase out for adjusted gross income above $400,000 on a joint return, or over $200,000 on a single or head-of-household return.

Although the proposal calls for the measure to be temporary, lasting just 12 months, the hope is that it will prove so popular that it will become permanent. Democrats would also like to make the payments recurring and to be paid out in advance. So families would receive a monthly direct payment, like the stimulus checks, of $250 per month for each child 17 and younger and $300 per month for each child under 6.

Biden’s proposal could reduce childhood poverty by 50 percent

One of the major benefits of the plan would be a reduction in childhood poverty. Researchers at Columbia University have found that the Biden Plan could cut child poverty by as much as 54 percent. Under the current child tax credit “there are 24 million children that are too deep in poverty to benefit from it,” according to Wes Moore of the Robin Hood Foundation.

On the Senate floor Bennet said “With the passage of the American Family Act, this child tax credit alone, we will cut childhood poverty in the USA by almost 50%. We'll cut childhood poverty for Latino kids by 60%, for Black kids for more than 50%. For kids living in tribes, more than 60%.”

Part of a bigger package

The White House has urged patience when it comes to negotiating and passing the stimulus package. Biden would like to do so on a bipartisan basis through regular Senate process, but the White House has said they aren’t willing to “take any tools off the table.” On Tuesday the Senate moved forward with debate on the Democrat’s budget resolution signaling that they will use reconciliation to pass it with a simple majority if necessary.