NewslettersSign inAPP
spainSPAINargentinaARGENTINAchileCHILEcolombiaCOLOMBIAusaUSAmexicoMEXICOperuPERUlatin usaLATIN USAamericaAMERICA

US NEWS

What does the Democrats’ proposed extension of the Child Tax Credit have to pass?

Democrats lack one crucial vote in their party to pass an extension of the enhanced Child Tax Credit which was incredibly effective at reducing poverty.

Update:
Democrats still trying to hash out Child Tax Credit extension
Kevin DietschGetty

Americans with eligible children that didn’t opt out of the monthly payment scheme enjoyed child allowance payments from July through December. This was made possible through the enhanced Child Tax Credit for the 2021 fiscal year.

Due to budget restraints the major revamp of the 25-year-old tax provision was only temporary but there were hopes that it would be made permanent eventually. A one-year extension was included in the Build Back Better bill the passed the House but was killed in the Senate due to universal Republican opposition and Democratic Senator Joe Manchin saying he would not lend his crucial vote to the initiative.

Also see:

Democrats still trying to hash out Child Tax Credit extension

Democrats have been trying to revive negotiations on the proposal and other spending measures since Manchin said on FOX News “I cannot vote to move forward on this mammoth piece of legislation,” at the end of last year. However, one of Manchin’s requisites for voting to extend the Child Tax Credit is implementing a work requirement, which was part of the previous, now current version, which could be a stumbling block with progressives in the party.

Under the American Rescue Plan one of the changes made the credit fully refundable which allowed those without any earned income to enjoy the benefit of monthly payments to stabilize their household finances. The result was childhood poverty dropping by around 40 percent, but the payments especially pulled children out of deep poverty.

Manchin doesn’t think recipients will use the money wisely

Manchin reportedly told colleagues behind closed doors that parents would misuse the monthly payments to buy drugs instead of spending the money on childcare. However, research into how the child allowance was spent showed that families used it for necessities. Other research has found that cash payments to households actually reduces spending on alcohol and tobacco.

A work requirement would deny the monthly payments to households where the only income is from a parent who receives disability benefits or to grandparents living on Social Security retirement who are raising their grandchildren. The number of grandfamilies has increased due to the opioid epidemic with parents unable to care for their children or have died from an overdose, which rose to over 75,000 during the 12-month period ending April 2021 according to the CDC.

Future child allowance may not resemble the 2021 Child Tax Credit

Another concern for the Democratic senator from West Virginia for the Build Back Better plan was its price tag, with the Child Tax Credit extension alone costing around $100 billion for one year, although advocates say that it more than pays for itself through the outcomes it produces. In order to pass other family-centered proposal priorities in Biden’s agenda that cost might have to be brought down which could mean reducing the amount that families receive.

Republican Senators Mike Lee and Marco Rubio have put forth a proposal for a increased Child Tax Credit and Senator Mitt Romney a child allowance. However they come with work requirements and have other features that might not be palatable to progressive Democrats.

Perhaps the best hope is a plan from the junior senator from Utah. Democratic lawmakers have been talking to the former presidential candidate about his Family Security Act which would provide families with monthly payments up to $350. The child allowance would be doled out through the Social Security Administration instead of the IRS handling the task.

Rules

To be able to comment you must be registered and logged in. Forgot password?