New proposals for strengthening tax credits, working families
Tax credits that help working families make ends meet should be treated as no less important than tax benefits exclusive to the very wealthiest of households. In fact, they’re even more critical to the overall stability of our nation’s economy.
Thus, NCTC has obtained the signatures of more than 300 local, state, and national organizations for a letter supporting new legislation to protect and strengthen the Child Tax Credit (CTC) and (EITC).
“Unpredictability heavily stamps the day-to-day lives of working families who struggle to cover the basics, from rent and groceries to utility bills and community college tuition,” we wrote to Sens. Sherrod Brown and Richard Durbin, chief sponsors of S.836. “Your bill takes a significant step toward greater predictability, ensuring that taxpayers need not fear the loss of EITC and CTC provisions that specifically shield more than 13 million working households from each paying an average of $843 more in taxes.”
The bill would make permanent a lowered CTC income-eligibility threshold, to help more of the poorest families raising children, as well as EITC provisions representing greater assistance for married couples and for families raising three or more kids.
These temporary measures had been set to expire last Dec. 31, but were extended for five more years through the “fiscal cliff” deal. However, that deal also made permanent a set of generous estate tax rates, benefiting only the very wealthiest of households – and begging the question, why should struggling families be treated differently?
S.836 goes on to propose several other EITC improvements, including:
- An increase in the far-too-small credit amount for childless workers, many of whom are taxed further into poverty under current law
- Simplification of the credit’s “qualifying child” and “abandoned spouse” rules
- Elimination of the EITC’s investment-income test
All these suggestions are significant additions to federal policy discussion of possible tax reforms. So, too, are several other bills emerging so far this Congress:
- H.R.769, which Rep. Rosa DeLauro has introduced to make permanent the CTC’s lowered eligibility threshold
- H.R. 1738, which Rep. Lloyd Doggett has filed to improve and make permanent the American Opportunity Tax Credit (AOTC), which helps students to cover higher-education expenses
Update: Sen. Charles Schumer similarly has reintroduced legislation – S.835 – to make the AOTC permanent and improve its support for college students and their families. In a future blog post, we’ll delve into the AOTC proposals in greater depth.
By Sean Noble, NCTC Director of Policy & Research