The U.S. House of Representatives is moving ahead with a new bill that would expand tax credits for families, creating a rift among conservatives over whether to support pro-family policies or oppose the bill as a costly expansion of the welfare state. It became clear.
The House of Representatives on Wednesday passed a bill with bipartisan support to reform and extend the Child Tax Credit, which was set to expire in 2022, through 2025. The debate over the child tax credit has exposed differences among conservatives over family policy, with some calling for tighter limits. Some propose family-friendly tax cuts to ensure people stay in the workforce, while others are willing to take the risk of people not working if it means supporting their families. (Related: One line missing from key Fed statement could spell trouble for the economy)
“For the past three years, American families, farmers, workers, and small businesses have seen their paychecks cut, their purchasing power diminished, and they have been hit hard by inflation,” said House Ways and Means Chairman Republican Rep. Jason Smith of Missouri. “We have been bearing the brunt of it,” he said. The Ways and Means Committee stated: press Release about the bill. “Under the American Families and Workers Tax Relief Act, small businesses will benefit from pro-growth policies that help them expand, build new facilities and hire new employees at higher wages.
The bill would expand the current child tax credit, whose income requirements leave many low-income families without benefits. according to On CNN. Families will also have the option to take a tax credit based on their previous year's income, meaning if someone earned more in the previous year, they would be eligible for a larger benefit.
Some opponents of this bill point out that: data According to a report compiled by the American Enterprise Institute (AEI), the bill could result in 700,000 parents quitting their jobs because they could use the previous year's income to qualify, meaning that parents would have to If you meet the income threshold within that period, you will receive the funds in both years. . By contrast, the built-in incentives to increase family income to get bigger tax breaks only encourage 395,000 parents to start working.
“The child tax credit, as it currently exists, promotes employment because you only earn it if you work,” Kevin Corinto, a senior research fellow at AEI and one of the study authors, told DCNF . “The Wyden-Smith bill would change credit work incentives in a number of ways. Assuming you worked this year, you could maintain your credit even if you didn’t work next year, so looking back over the year you would have a net incentive to work. A per-child benefit provision would strengthen the incentive to participate in work, but weaken the incentive to move from part-time to full-time work.”
Jonathan Ingram, vice president of policy and research at the Government Accountability Foundation, told DCNF that the new child tax credit will ultimately disincentivize work and encourage family misconduct and addiction.
Ingram gave the example of a family of three with a single mother and two children who earn $23,833 in current credits and receive $3,200, according to calculations given to DCNF. Under the House proposal, mothers would only have to earn $13,167 to get the same credit, which would discourage them from working.
Hakeem Jeffries is the Speaker of the House of Representatives. Every major piece of legislation this Congress passed today with more Democratic votes than Republicans, including the expansion of the child tax credit.it is #People before politics pic.twitter.com/JW1ZDQyUqB
— Congressman Eric Swalwell (@RepSwalwell) February 1, 2024
“The child tax credit that currently exists is an effective way to reduce taxes for families,” Collins told DCNF. “There is always a trade-off between focusing resources on low-income households and encouraging work. There is also the issue of cost, as additional benefits will have to be paid for by taxpayers at some point. “Policymakers need to make these trade-offs based on accurate information about employment effects and budgetary costs.”
Duncan Braid, coalition director at American Compass, disagrees that lowering the income requirement to the proposed level would undermine incentives, as long as it still exists. He points out that it's unlikely that nearly 550,000 people would choose to give up a year's worth of income just because they get a tax credit.
“Think about the struggles of a single parent making $40,000 a year,” Blade told DCNF. “Will they be able to part with that income? Maybe he's the only one in America to make this choice, but this change in credit means he's going to have 700,000 people moving in and out of the workforce.” Will it? It just doesn’t pass the smell test.”
Tax breaks for families have strong support from conservatives because they cut taxes and encourage family values, but conservatives differ by expanding the welfare state and discouraging Americans from working. The question is what requirements are needed to ensure that this does not happen. Some Republicans, like Sen. Mitt Romney of Utah, also oppose expanding the entitlement program without a reliable way to pay, citing the country's large deficits and debt. according to On CNN.
“We support work-related benefits, and we have past iterations like the Great Society Benefits Program that encourage laziness,” Blade told DNCF. “These programs clearly encouraged people to leave the workforce, not get a job, or not get married. That's why it's so important to tie this provision to the previous year's income. Because it encourages people to work, which is an important difference from arguments for expanding the welfare state.
Some, including the Biden administration, have blamed the large increase in child poverty on the expiration of tax credits created during the coronavirus pandemic. According to the government's supplementary poverty measures, the number of children living in poverty increased from 5.2% to 12.4% from 2021 to 2022, and the overall poverty rate rose by 4.6 percentage points to 12.4%.
Republican Chip Roy of Texas said late: “I'm not at all happy with the further expansion of the child tax credit, which is quite high. By the way, this could essentially give a tax credit to children of illegal aliens. “Gender is not excluded.” January. “Given the current situation and what is happening at the border, this is a real issue that we are concerned about.”
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