Wednesday, November 22, 2017

Senate Republicans’ new $2,000 child tax credit helps them — but doesn’t really help the poor

Dylan Matthews · Wednesday, November 15, 2017, 4:38 pm

Marco Rubio would get $2,200 a year more. A poor single mom would get $75.

One of the big changes in the latest Senate tax bill is, on its surface, a big benefit for families. The bill would double the child tax credit, now set at $1,000 per child, to $2,000.

That’s far more than either the initial House or Senate bill proposed increasing the credit, and because the size of the benefit doesn’t vary by tax bracket, it’s a more progressive policy than the personal exemptions the enlarged credit replaces.

But if you look at the details, there’s something unseemly about how the credit expansion works. Basically, the bill does little to expand access to the credit for the poor and a lot to expand access for affluent families, including those of members of Congress.

Put it this way. A single mother with two children working full time at the minimum wage would only get $75 more under the proposal, as calculations from the Center on Budget and Policy Priorities show. But Sen. Marco Rubio (R-FL), who along with his wife earned $335,963 in 2014 according to their tax return, would get a more than $2,200 cut.

Again: Marco Rubio would gain nearly 30 times more than a single mother in working poverty. He even gets a bigger benefit in percentage terms.

How the credit leaves out poor families while helping senators

This situation arises from two problems with the proposal. One, it does little or nothing to increase “refundability,” which enables the child credit to help poor families who don’t earn enough to pay income taxes. Two, the proposal would dramatically expand access to the credit for families making six figures, including many members of Congress.

Currently, you have to make at least $3,000 a year to get the child credit, and even then it phases in slowly, at a rate of 15 cents on the dollar. That’s true even if you have multiple children. So that hypothetical single mom with two kids making minimum wage (or about $14,500 a year) only gets $1,725 a year ($14,500 – $3,000 = $11,500; $11,500 x 0.15 = $1,725). If she made $50,000 a year, she’d get the full $2,000. Her benefit is reduced because she’s poor.

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