A woman reads a book to her children on January 28, 2020 in Budapest, Hungary. (Bernadett Szabo / Reuters)
Under the Democrats’ COVID Act, most American parents will get $ 3,000 per child or $ 3,600 for children under six this year. The money started going out last month; it is paid in a combination of regular installments and a lump sum at tax time. And there is a push to expand those payments through the massive bill the party is working on as part of the reconciliation process to make them a permanent part of tax law.
It’s a big change from the 2017 Republican Tax Act, which exhausted the $ 2,000 child tax credit, was paid only once a year, and was not fully “recoverable”. Non-working parents never got it, and it “stepped in” once the parents earned more than $ 2,500. The new amount is much higher, and the phase-in-phase that is supposed to make sure the credit gets you to work is gone.
As I’ve noted many times in the past, these are types of guidelines split the right deeply. Some see it as a family-friendly way to help parents and reduce poverty; some think they are a worthy counterbalance to some species that the tax system discriminates against Parents; and some fear that these payments, especially if they are not linked to work demands, will deter employment and bring back “welfare as we knew it”. I myself have suggested a cautious approach to expanding the credit.
This week the bipartisan Policy Project has one new report that tries to thread the needle a little bit.
Under the group’s proposal, the loan would increase to $ 2,200 (or at least compared to the pre-COVID status quo), but only $ 1,200 of that would be fully refunded; To get the full amount, the parents would have to work. For children under six, both numbers would increase by $ 600. And to control costs, the loan would “expire” sooner for wealthier parents: the exit would start at $ 150,000 for single parents and $ 200,000 for couples, rather than $ 200,000 and $ 400,000 under the law from 2017. In the meantime, the proposal would also increase the earned income tax credit to boost labor and take more enforcement action to prevent credits from being misappropriated.
The early exit would hit the politically powerful upper middle class, and the fact that the exit threshold for couples does not double would result in a marriage penalty. (Two single parents earning $ 150,000 apiece would get full credit, but they would be subject to exit if they marry.) In general, there is tension between trying to use money to fight poverty and trying to make things easier for parents across the board, and this proposal favors the former more than the status quo.
Overall, though, this is a middle ground worth considering. Also worth a look: Scott Winship on alternatives to unconditional child benefit.