Senate Stalls on Crucial Child Tax Credit
Republicans in the Senate find themselves under increasing pressure regarding a delay in a bill aimed at reducing child poverty. Progressive think tank, The Center on Budget and Policy Priorities (CBPP), asserts that their stance may leave millions of children in poverty due to inserting deterrence measures, colloquially known as "poison pills," purporting to sabotage the bill.
How Does the House of Representatives Stand on the Issue?
In January, the House of Representatives greenlit the Tax Relief for American Families and Workers Act. Touted as bipartisan legislation, it proposes an augmentation in child tax credits and business tax breaks. The bill secured a decisive 357-70 vote. Following this legislation means a gradual upsurge in the refundable credit amount, kicking off at $1,800 for 2023 tax returns, $1,900 for 2024 returns, and ultimately ramping up to $2,000 for the tax returns of 2025.
According to the Tax Policy Center statistics, this legislation implies an average tax cut of about $680 in its inaugural year. CBPP's previous analysis speculated a benefit for nearly 16 million children during the first year, including 3 million toddlers under three.
Is the Senate Getting in the Way of Poverty Reduction?
However, this potentially transformative bill now faces a roadblock in the Senate. Aligned with the GOP, Senator Mike Crapo criticized the bill for being too reliant on the "prior year's earnings provision." This clause allows families experiencing a dip in their annual income to use their past year's earnings for credit calculation.
This opposition has prompted Oregon Senator Ron Wyden, the Democratic front-runner for the bill, to suggest a removal of this disputed lookback provision. Yet, the CBPP highlights that Republicans have started to "change the goalposts" by attempting to strip the child tax credit from immigrant families who file their taxes using an Individual Taxpayer Identification Number instead of a Social Security number, in addition to implementing a stricter refundability cap.
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What Does This Impasse Mean for American Households?
Senator Mitt Romney of Utah has expressed concerns over the bill's financing, remarking in February about its potential to evolve into another high-cost entitlement program.
Underscoring the potential repercussions of these opposing viewpoints, CBPP's Chuck Marr emphasized, "If enacted, they would result in higher child poverty and worsen children's circumstances in families with parents who work for low wages." Marr's detailed analysis indicates that it could cause an estimated half a million children to live needlessly in poverty. Another considerable consequence is that the changes will ensure the demise of the tax bill in the Senate.
A profound impact on working families and businesses is also a primary concern. Businesses looking forward to securing tax benefits, which Republicans have reportedly supported in the past, could lose these advantages if the House bill struggles in the Senate. As Marr suggests, in this case, the ultimate victors might be those committing tax fraud, while families and businesses could lose out.
