The final negotiations on the Rebuild Better Act hit an almost fatal roadblock, with Sen. Joe manchinJoe ManchinEquilibrium / Sustainability – Dam ruptures crown year of catastrophes Narrow track for Build Back Better Four environmental struggles to watch in 2022 PLUS (D-WV) stating that he could not vote for the bill. But the senator’s proclamation could be the fragrant salt Democrats need to finally hear what he has been saying for months about the price of the legislation, its scope, and especially his changes to the child tax credit that would extend. temporary expansions implemented earlier this year as part of the American rescue plan. In particular, the senator has repeatedly challenged the proposed direct extension of extended credit, including the severing of its link to work, its lack of targeting, and its price tag of over $ 1,000 billion over the next decade. .
The CLC has always been a bipartisan brand of success, helping families meet the costs of raising children and providing adequate resources for healthy development. Created in 1997 under President Clinton, it has subsequently been expanded under every president since. Indeed, President BidenJoe BidenFauci says the CDC has reduced isolation time so people get back to work faster. temporarily increased the CTC for 2021 by extending full credit to households with little or no income, increasing the maximum credit for most families to $ 3,000 per child (and $ 3,600 for children five and under) , and providing a portion of that year’s credit every month instead of keeping the full amount until tax season. Without action from Congress, parents will see these additional provisions disappear in January.
If lawmakers take the urgent need to provide support to struggling families seriously, the CLC should be continuously expanded and improved. It is now clear, however, that Democrats must seek practical common ground that involves more cost-effective targeting, support for all families while retaining work incentives and, most importantly, a sustainable agenda that can outlive Democrats. or the Republicans by keeping control. . In fact, moderate Republicans, including Sen. Mitt RomneyWillard (Mitt) Mitt RomneyCollins open to overhaul child tax credit negotiations that will expire overnight Energy and environment – Biden tightens rules on auto emissions White House hails “significant progress” on conservation objectives (R-Utah), continue to call for CTC collaboration between the parties, leaving that as an option if the program does not cross the finish line in the BBB package.
Either way, the bandage that needs to be ripped off first is the cost of the program. Credit is poorly targeted, married couples earning $ 400,000 per year still receive $ 2,000 per child. Biden’s misguided tax promise to keep the 98% of households earning less than $ 400,000 harmless shouldn’t prevent policymakers from closing a deal. Democrats should at least lower the CTC’s elimination thresholds to $ 150,000 for single parents and $ 200,000 for couples. They could still offset the costs by aligning with Republicans to permanently reduce the dependent exemption, which will reappear in 2025 when the Tax Cuts and Jobs Act 2017 the provisions expire.
Another shortcoming of the CLC is that it has traditionally provided little or no support to families most in need. Prior to this year, it was not available for the millions of households with children but no income, and only $ 1,400 of the total credit of $ 2,000 per child was available for households without federal income tax (which could , for example, include a single mother earning minimum wage). Congress can come to a compromise by designing a CTC that replaces its reimbursable cap with a near-universal monthly allowance – a portion fully available regardless of income – and an additional monetary incentive for labor market participation. This is important because, as evidenced by the Earned Income Tax Credit, rewarding work is a powerful tool that can support the finances of low-income families: Almost half The EITC’s poverty reduction is all about attracting people to the labor market and encouraging workers to increase their working hours, not only boosting their long-term earning potential, but also immediate financial support for them. help their children escape poverty.
The solutions presented here, embodied in a reform package of the Bipartisan Policy Center, can bring together Democrats and Republicans to provide financial support to low-income families historically excluded from the CLC, promote work, and define credit expansion on a fiscally responsible basis. If lawmakers can resolve their differences – whether with Manchin in BBB, or better yet, between parties afterwards – this presents a rare opportunity to dramatically and persistently reduce child poverty while also achieving other goals. policies.
Politicians have tight elbows when it comes to negotiations and it’s easy to talk to each other, but American parents and their children are now counting on a solution. Lawmakers have everything to gain and nothing to lose by sharing a vision for an improved CTC that can politically and substantially stand the test of time.
Shai Akabas is Director and Rachel Snyderman is Associate Director of Economic Policy at the Bipartisan Policy Center.