In early August, the senate rejected a bill that would have expanded the child tax credit. This comes after the U.S. House of Representatives passed, on a bi-partisan basis, an expansion of the Child Tax Credit (CTC) in February. However, the current failure does not spell the end of the CTC. Vice-Presidential Candidate JD Vance told CBS he would like to increase the amount each family receives to $5,000. According to the New York Times, “Top Senate Republicans reasoned that they may be in a better negotiating position after November’s election, when they could win control of the chamber.”
What the Bill Does
The bill expands eligibility for the CTC by including a refundability portion for low-income families. “Currently, low-income families whose income tax liabilities are lower than the credit don’t receive the full $2,000 per child because the credit isn’t fully refundable—they can only receive a maximum of $1,600,” The Dispatch reported.
The law would also increase the amount per-child low-income families would receive. Presently, “the child tax credit phases in for lower-income families at the same rate no matter how many children are in the family,” according to The Washington Post. The proposed law would increase the amount of money based on the number of children a family has.
Proponents
Advocates of the bill say it helps working families. Sarah Calame, research associate at the progressive Center on Budget and Policy Priorities said the policy would expand the CTC for 16 million children in families with low incomes. “Ample research indicates that providing additional income to families with low resources yields significant, lasting benefits for young children’s health, education, and future earnings.”
Jason Smith, the Missouri Republican introduced the bill to Congress, thinks the legislation will help families beset by high costs. “We maintain work requirements while enhancing the benefit to support families crushed by today’s inflation and remove the penalty for families with multiple children.”
Critics
Some critics think the bill thinks it incentivizes low-wage work. Scott Winship the director of Center on Opportunity and Social Mobility at the center-right American Enterprise Institute modeled the potential impact of the one-year lookback provision. He and his colleagues found the provision could reduce the workforce by about 150,000 people because of the tax-penalties workers face when they earn more income.
Catholic Church
In January, several U.S. Bishops, including Bishop Robert Barron of Winona-Rochester, sent a letter to Congress outlining their support for broad CTC expansion. “Recent poverty data reveals that 5 million children entered poverty in 2022, underscoring the urgency of improving the Child Tax Credit for the most vulnerable families,” they wrote. As part of that expansion, the bishops recommended that the tax credits be made available to the lowest income families without work requirements, that mixed-status families be eligible, that the credit be available for the year before birth, that there be no marriage penalty, and that no other poverty programs are cut.
