Clinton firmed up her agenda for children and families last week with a plan to reform the Child Tax Credit. Her announcement headlines it as a “middle class tax cut,” but it would deliver needed income support to poor and near-poor families with children, especially the very young.
We can see that Clinton attends to progressive advocates and members of Congress who attend to them. Basically, she’s borrowed from bills previously introduced in Congress, which borrowed from a proposal by the Center for American Progress.
They all would make the CTC available to working parents who can’t claim it now and deliver the greatest benefits to those with children in their early years.
CAP argues that those families’ needs are greatest — a combination of relatively low earnings, student debt and the costs of necessary things for babies, e.g., cribs, diapers.
One might add the costs of child care, which are extraordinarily high for infants and toddlers. They’re probably a bigger stretch for parents who’ve no student debt because they, at best, finished high school.
Low earnings alone surely justify the inclusion of a more robust CTC in an anti-poverty agenda — optimally, one that would boost the credit for all minor-age children.
The poverty rate for children under six was 17.3% last year, according to the Center for Budget and Policy Priorities. But it was 15.6% for older children. Their parents would fare better under Clinton’s plan too, though not as much better.
Her plan would do three major things. First, it would make the CTC available from the first dollar earned, rather than the first after $3,000 — a change that progressives have advocated for years.
Second, it would selectively increase the rate at which the CTC phases in. It’s now 15% of earnings over the threshold to claim it, up to a $1,000 per child maximum. Clinton would triple the rate for children under five.
And third, she’d double the maximum parents could claim for those kids.
So, for example, a single mother who has an infant and a toddler and works full time at the federal minimum wage would get $4,000, instead of about $1,800, i.e., less than the current full credit for the kids.
Now, the CTC, as you may know, is a refundable credit, like the heftier Earned Income Tax Credit. So if a parent owes less than zero when she claims it, plus deductions and the EITC, she gets a check (or the equivalent) from the Internal Revenue Service.
The refunds help account for the credit’s anti-poverty impact — and its potential. The CTC lifted about 3.1 million people, including some 1.7 million children over the poverty threshold in 2013, the Center on Budget reports.
An additional 13.7 million, including about 6.8 million children were less poor than they’d have otherwise been.
Clinton’s proposals would lift about 1.5 million more people out of poverty, the Center estimates. This figure includes roughly 400,000 children under five.
And about 5.2 million people, including 1.1 million young children in deep poverty, i.e., at or below half the applicable threshold, would also gain income. Still poor, but less so.
Not only poor families would benefit. Eligibility for the CTC would apparently plateau at the same maximum adjusted gross income and then phase out at the rate current law sets.
So a single parent with two children could get some tax reduction until her income exceeded about $115,000. A cut-off about $45,000 higher if she married and filed jointly.
The CTC, however, benefits primarily lower and moderate-income working families. It still would. But the Center for Tax Justice finds that eliminating the threshold and tripling the phase-in rate would deliver the greatest benefits to families in the bottom fifth.
The Center on Budget’s analysis indicates a tilt toward families way down in that fifth. About 77% of the people the CTC expansions would benefit are poor, according to its estimates.
The reforms would cost the federal government an estimated $208.7 billion over the first 10 years, if they became law this year, which, of course, they won’t.
The revenue losses would be a miniscule fraction of the federal budget, which was somewhere around $3.9 trillion for just last fiscal year.
And Clinton’s total tax plan would offset the CTC reforms many times over. The Tax Policy Center estimates revenue gains at about $1.4 trillion over the same 10 years its CTC estimate covers. More than 90% of the increase would come from the very wealthiest households.
So we’re highly unlikely to see the whole package pass in the next Congress. But say — oh, let’s say — that Clinton becomes our next President.
Might we see the CTC expansions or something like? Dylan Matthews at Vox thinks not, unless the Democrats win a majority in the House. Jordan Weissman at Slate views all Clinton’s tax proposals as DOA unless Democrats gain control of the Senate too.
I’m inclined to feel more hopeful. Democrats got the current CTC threshold converted from temporary (and expiring) to permanent as part of a big, urgently-needed budget deal.
That won’t be the last near-crisis because Congress tends to put off politically difficult decisions until the last minute. And a whole lot of decisions have become politically difficult as rifts within, as well as between the parties have grown.
Grasping at straws, it may seem. But I do think the CTC expansions have a chance. And I hope that when an actual bill emerges, they provide more relief for families with older children, as Clinton suggests they might.