Over 40 Democratic senators have signed on to a bill that would make the 2021 expansions of the child tax credit and the earned income tax credit permanent.
The introduction of the Working Families Tax Relief Act comes directly on the heels of a three-part tax package introduced by House Republicans on the Ways and Means Committee, thus establishing the tax priorities of both parties for tax legislation discussions expected later in the year.
During a May 14 Senate Finance Committee hearing titled “Anti-Poverty and Family Support Provisions in the Tax Code,” Senator Sherrod Brown, Democrat of Ohio, called for an expanded Child Tax Credit (CTC) to cut taxes for families. The hearing followed Brown’s introduction of the Working Families Tax Relief Act.
“EITC and CTC are two of the most effective tools we have to put money in the pockets of working people, help them keep up with the rising cost of living, and pull children out of poverty,” said Brown. “Expanding them will give millions more Americans a foothold in the middle class and allow parents’ hard work to better pay off.”
The Working Families Tax Relief Act would:
- Boost the incomes of 40 million households
- Increase the CTC to $3,000 for children aged 6-17 and $3,600 for children ranging from 0-5 and make the credit fully refundable
- Deliver the CTC monthly, providing a reliable source of financial stability so families can better keep up with the cost of living
- Nearly triple the EITC for workers without children and make the credit available for people starting at age 19 and eliminating the maximum age
- Make permanent the American Rescue Plan’s expansion of the Earned Income Tax Credit and Child Tax Credit
In testimony before the Committee, Amy Matsui of the National Women’s Law Center, told lawmakers that even before the pandemic, many women, households of color, and families with low incomes struggled to make ends meet from paycheck to paycheck.
“Both the EITC and CTC have a long track record of supporting women, families of color, and families with low incomes,” said Matsui. “Both credits serve a greater proportion of households of color, though a larger number of white households receive the credits.”
Bruce Meyer, Professor University of Chicago Social Policy Center, told members that a child allowance has been sharply oversold by its proponents.
“This route is not a long-run solution to poverty and risks encouraging the formation of family units that cannot adequately support their children,” he said.
Outside groups involved in reducing poverty praised the legislation.
“We are enthusiastic about the reintroduction of the Working Families Tax Relief Act, which would continue the American Rescue Plan’s middle class tax cuts and help alleviate child and family poverty by expanding the Child Tax Credit and the Earned Income Tax Credit,” said Kristin Rowe-Finkbeiner, executive director and CEO of MomsRising.
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