Senator Joe Manchin wants fewer households to receive child tax credit payments

0

Democrats must determine how many households must stop receiving monthly child tax credit payments in order for Sen. Joe manchin happy.

The West Virginia Democrat has refused to back the party’s ambitious spending plans unless Democrats cut costs and deny various benefits to people who earn what he deems too expensive or not at all.

Since July, households earning up to $ 150,000 per year have received $ 300 per child under 6 and $ 250 for older minor children each month. Democrats want to maintain the monthly payments after their current December expiration as part of a much larger bill that would expand access to child care, education and health care.

Senator Joe Manchin is pushing for stricter limits on child tax credit payments, although he has not said exactly where he thinks the limit should be. (Photo: Leah Millis via Reuters)

Childrens payments are arguably Democrats’ most prized political achievement, but with the Democratic caucus only having a slim 50-seat majority in the Senate, it can’t pass anything without Manchin on board.

Manchin said every aspect of the bill should have “job requirements,” to deny benefits to the unemployed, and “means tests,” to cut high-income people. He did not specify where he would draw the line, but since last year he has repeatedly mentioned $ 50,000 a year as the income below which a person counts as a “working poor”.

“Basically 90 million taxpayers file taxes of $ 50,000 or less,” Manchin said Monday in response to a question from HuffPost about where he would like to target benefits. “The average American household income is $ 68,000. If you want to target, target the people who need it most, those who work.

Manchin wouldn’t say if he pushes Democratic leaders to adopt a $ 50,000 income threshold for the child tax credit.

“We’re talking about all of this,” Manchin said.

Democrats expanded the child tax credit earlier this year as part of the US bailout, making it available to parents whether or not they pay federal income taxes and telling the IRS to advance repayments on a monthly basis.

The guaranteed income for parents will reduce child poverty, and Democrats believe it will one day be as popular and politically powerful as Social Security retirement benefits. That’s why they put it in place so that households with incomes close to $ 150,000 receive full payments so that the policy has a supportive middle class base.

Manchin believes that sending checks to the unemployed and high income earners will create an “eligibility mentality,” which is Washington’s way of saying money will make people lazy. During the last debate on coronavirus relief checks, Manchin pleaded for reduction of checks people earning over $ 50,000 and couples with incomes over $ 100,000.

Changing the rules for the child tax credit could save money, but it would come with risks. On the one hand, people with incomes above the new lower limits who received full monthly payments this year might be crazy to receive smaller payments next year. On the other hand, some parents might feel like they need to opt out of the program just because they fear the money will be clawed back at tax time if their overall income ends up going over the threshold.

“You could really hurt the granting of credit on a monthly basis,” said Elaine Maag, research associate at the Urban-Brookings Tax Policy Center.

Democrats could reduce the number of families that unexpectedly exceed lower income limits. Last month, House Democrats drafted an extended credit extension that would allow taxpayers to base their credit amount on their lowest annual income in any of the previous three years, rather than the most recent year they filed their taxes.

Another problem with the credit cut is that President Joe Biden has promised that no family earning less than $ 400,000 will face a tax increase on the bill. Withdrawing credits – even if they were paid in the form of advance monthly payments – certainly increases a family’s overall tax bill.

Extending the credit until 2025, as Democrats see it, would cost more than $ 400 billion. According to an estimate from the Tax Foundation, a conservative think tank, phasing out the credit for all tax filers earning more than $ 60,000 would reduce the cost by $ 116 billion. (The phasing out of benefits to $ 60,000, even for two-earner households, is much more stringent than what Manchin proposed for stimulus checks earlier this year.)

In other words, considerably stricter eligibility rules could make the program more ‘targeted’, but would not save tons of money as most payments already go to low-income households.

“At the end of the day, it’s difficult to significantly reduce costs by reducing phase-outs because expansion costs are really at the bottom of the scale due to full payback,” the economist said. Tax Foundation, Erica York, in an email.

As Senator Michael Bennet (D-Colo.) Said, “Unfortunately, there just isn’t a lot of money out there.”

It is possible that Democrats could satisfy Manchin with other changes to the bill, leaving the child tax credit unscathed.

In the spring, Manchin couldn’t get Democrats to impose lower income limits on full pandemic relief checks, but party leaders agreed to a lower limit for partial payments, reducing amounts to households earning over $ 150,000.

Imposing a “work requirement” or denying checks to households with very little or no income at all, would probably save more money, but is probably a failure with the Democrats, because what they prefer in the world. policy is that it reduces child poverty by giving money to parents.

“I don’t see why anyone would want to do this,” Bennet said. “It erases the fight against poverty.”

This article originally appeared on The HuffPost and has been updated.


Source link

Share.

Leave A Reply