On July 15, millions of moms and dads across New Hampshire found money in their bank accounts thanks to the Child Tax Credit (CTC) included in President Joe Biden’s U.S. Plan for Families. Parents received $ 250 or $ 300 per child “without having to take action,” notes the White House. Democrats were quick to take credit for it.
“The child tax credit has just started rolling out so families with children can see this tax cut,” Senator Maggie Hassan told WGIR radio last week.
âThe new and improved child tax credit created by the American Rescue Plan is a historic tax cut for middle-class families,â Representative Annie Kuster (DN.H.) said in a statement. “Eligible families can receive up to $ 3,600 for each child under age 6 and up to $ 3,000 for each child age 6 to 17 for 2021.”
State Senator Becky Whitley, D-Concord, told reporters that “thanks to Congressional Democrats, including the four members from New Hampshire, eligible families began to receive an average tax cut of 4 $ 380 “.
Interestingly, Kuster also notes that “families who don’t normally file taxes will have to file a 2020 tax return to receive the monthly payments.”
How can families who âdo not normally file their taxesâ benefit from a âtax reductionâ?
They can’t, says Sen. Marco Rubio (R-Fla.). He calls the CTC a âradical expansion of the federal welfare stateâ.
“By the next tax season, some households without working adults will receive more than $ 10,000 from these payments. No labor required. Just free money on top of America’s existing safety net,” Rubio wrote.
According to the White House, as part of the American rescue plan, “all working families [emphasis added] will get full credit if they earn up to $ 150,000 for a couple or $ 112,500 for a single-parent family. “
This includes families who do not pay federal net income tax.
The IRS also views the CTC as more than a tax cut. IRS says Although both reduce the amount owed to the federal government, a tax cut reduces the percentage paid to the IRS based on income, while a tax credit reduces the amount owed once that percentage has already been calculated.
Additionally, the CTC 2021 is âfully refundable,â which means that even if you have no income or paid tax last year, you are still eligible for the credit.
“The parts of the [American Rescue Plan] The law actually reduces the tax burden for many tax filers â, according to the National Taxpayers Union Foundation (NTUF), “However, the bulk of the underlying” tax cuts ” [the claims] don’t actually cut anyone’s taxes. Instead, they show up in the budget as an expense, including the âclawback remittanceâ stimulus checks.
CTC is not considered income and will not be subject to additional taxes. This reflects other stimulus payments that have been sent since the start of the COVID-19 pandemic.
Or as Rubio said, “Why [do] they continue to call this program âtax reliefâ when it is for people who do not pay taxes? “
For Americans who pay income taxes, some may have to repay some or all of the payments when it comes time to file taxes next year.
For example, if a parent ends up receiving more than they are entitled to under the CTC, that money will be returned to the government. If the number of eligible children has changed or if the children have moved to a different age bracket, it is possible that some parents are receiving too much with the advance payments.
Ironically, the CTC will end up costing taxpayers more in the end, says the National Taxpayers Union (NTU). The Treasury Department estimates that if the program were extended for four years, it would cost about $ 112 billion per year, for a total of about $ 449 billion.
Senator Mitt Romney (R-Utah) offered several ideas to make the CTC more accountable, including reforms and modifications to existing programs such as the National and Local Tax Deduction (SALT), the Earned Income Tax Credit (EITC) and other overlaps. programs. Romney’s proposal would also make the CTC an anti-poverty measure, eliminating payments to Americans who in some cases earn six-figure wages.
As Democrats push the CLC to become a permanent fixture, the NTU notes that not all of this money will be reserved for those who really need it.
Upcoming legislation “spend[s] hundreds of billions of dollars, at a minimum, in public benefits that go to upper-middle-class households or to wealthy households that are not in urgent need of support. “Part of this legislation is the” extraordinarily generous [CTC] which flows, in part, to wealthy households. “
This story was originally published by the NH Journal, an online news publication dedicated to providing fair and unbiased reporting and analysis on new policies of interest to New Hampshire. For more stories from the NH Journal, visit NHJournal.com.