It’s possible to retain the conception of the child tax credit as a leveling mechanism and make it fully refundable without casting it as a central anti-poverty measure, which would pose a risk to existing anti-poverty measures. Therefore, the credit was designed to reduce the income tax burden on families and “better recognize the financial responsibilities of raising dependent children.” The value of the dependent personal exemption had declined in real terms by over one-third, the JCT noted. The Joint Committee on Taxation explained that Congress created the credit because it believed that “the individual income tax structure does not reduce tax liability by enough to reflect a family’s reduced ability to pay taxes as family size increases” ( JCS-23-97). It was enacted following years of study by groups such as the National Commission on Children and multiple competing proposals. The Taxpayer Relief Act of 1997 was the vehicle through which the child tax credit entered the tax code. With the notable exception of the economic impact payments last year, it hasn’t historically been the IRS ’s job to distribute benefit-type payments on a scale envisioned in the current child tax credit proposals. That would mean the IRS, in conjunction with the Social Security Administration for the Family Security Act, would need time to adjust to the new program. As a practical matter, the IRS has only scant experience in administering programs like this, and the perhaps most relevant recent experiment in monthly benefits - the advance earned income tax credit - involved far fewer taxpayers than the expanded child tax credit ( Michelle Lyon Drumbl, Tax Credits for the Working Poor 36-42 (2019)). The proposals to deliver the benefit monthly include a non-trivial administrative problem. Congress has considered straying from the ability-to-pay premise many times since the credit’s inception in 1997, but it hasn’t done so yet. It has never before been considered an antidote to childhood poverty that also happens to accrue to households with higher incomes. The child tax credit has essentially always been a recognition in the tax law that households with children are less able to pay taxes than households not raising children. An expanded and fully refundable child tax credit would provide financial assistance to children living in poverty, but all the proposals cast a much wider net than poverty alleviation because the credit wasn’t originally designed to accomplish that important goal, and making it better fit that objective could undo its underlying purpose. Mitt Romney, R-Utah - want to enlarge the benefit amount of the credit, make it fully refundable, and have it delivered monthly. Reformatting the credit to make its benefits available monthly would also come with substantial administrative challenges.Īll three proposals - the American Family Act of 2021, the budget reconciliation proposal from House Ways and Means Committee Democrats, and the Family Security Act framework from Sen. Positioning the child tax credit as the centerpiece of childhood poverty alleviation efforts by the federal government represents a major change in the conception of the credit - a change with implications for both its design and longer-term prospects. Reducing childhood poverty is an important policy priority cited for these proposals. There are three competing proposals in Congress to deliver added tax benefits to a broad swath of families with children through the child tax credit.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |