August 2, 2021
On July 15, millions of moms and dads across America 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.
“For the first time, it is the middle class that is benefiting from a tax cut. This is a huge victory for our economy and our working families. We need to make sure our #ChildTaxCredit is permanent,” said tweeted Rep. Chrissy Houlahan (D- Chester).
During a press conference with Senator Cory Booker (DN.J.) and Speaker of the House Nancy Pelosi (D-Calif.), Senate Majority Leader Chuck Schumer (DN.Y.) a hailed the CLC as “a substantial life-changing and potentially tax cut for American families.”
And Pennsylvania Senator Bob Casey attended a July 14 Democratic event “highlighting the local impact of the Democrats’ new tax cut on middle-class families,” according to a statement from the Pennsylvania Democratic Party. Casey too re-tweeted a message from Biden calling the CTC “one of the biggest tax cuts ever for the middle class.”
But is it? Not âthe most importantâ, but a real âtax cut? “
Senator Marco Rubio (R-Fla.) Does not think so. He calls the CTC a âradical expansion of the federal welfare stateâ.
“By the next tax season, some households with no working adults will receive more than $ 10,000 from these payments. No labor required. Just free money on top of the existing US safety net,” Rubio wrote.
According to to the White House, the American Rescue Plan increased the child tax credit from $ 2,000 per child to $ 3,000 per child for children over six and from $ 2,000 to $ 3,600 for children under six years, and raised the age limit from 16 to 17.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 put it, “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 what 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 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. “
The Delaware Valley Journal provides unbiased local reporting for suburbs of Philadelphia in Bucks, Chester, Delaware and Montgomery counties. For more stories from the Delaware Valley Journal, visit DelawareValleyJournal.com