Democrats unveil bill for child cash payments up to $3,600 for American families
House Democrats unveiled laws to allow millions of American families to pay up to $ 3,600 in direct payments per child, expanding the Child Tax Credit (CTC) provisions included in the stimulus package launched by the Congress is advanced.
The $ 1.9 trillion tax credit in President Joe Biden's stimulus proposal would be increased by one year. However, the legislature would like to make the increased amount permanent and also send monthly payments directly to private households instead of paying a lump sum at tax time.
“Nobody pays their bills only once a year. You pay your bills every month, "Rosa DeLauro (D-CT), one of the lawmakers who introduced the legislation, told a press conference on Monday. “We're making it permanent. We index the value of inflation and ensure that children and families can count on the credit in the future. "
U.S. Representative Rosa DeLauro (D-CT) attends a news conference on the Child Care Act and Child Care Act for Economic Boom in the U.S. Capitol on July 29, 2020 in Washington, DC. (Photo by Drew Angerer / Getty Images)
Under the law, parents or guardians would receive direct annual payments of $ 3,600 for children under six and $ 3,000 for children ages six to 17. The bill makes the payment fully refundable which means low income families can access the full amount even if they don't donate I don't owe any income taxes. The legislation would cost $ 117 billion a year.
Full payments are available for single applicants up to $ 130,000 in value and joint applicants up to $ 180,000 in value. After these income thresholds, payments would be reduced and phased out entirely for single applicants earning more than $ 150,000 and joint applicants earning more than $ 200,000. The payments are also tied to inflation.
"Give millions of children a better future"
The proposal comes because other Democrats, including House Ways and Means Committee Chair Richard E. Neal (D-MA), are trying to implement a similar plan of monthly payments for a year starting in July as part of the next incentive package, as per the package the plan received from Yahoo Finance. The full payments would go to individual filers who earn up to $ 75,000 for individuals and joint filers who make $ 150,000, and then expire.
Read more: Child Tax Credit and Other Ways To Save Money With Dependent Care
Under Biden's child tax credit proposal, families with children in the bottom 20% of the income distribution would receive an average benefit of $ 3,400, while families with children would receive an overall average benefit of $ 2,300, according to the Tax Policy Center.
"This is the time to expand the child tax credit," said Rep. Suzan DelBene (D-WA), co-author of the bill, at the news conference. "If we don't act now, we will miss a historic opportunity to give millions of children a better future."
"The existing structure ... is so regressive"
The Democratic proposal comes after Senator Mitt Romney (R-UT) proposed sending child payments to all American families on a permanent basis, with the Internal Revenue Service reclaiming some of those payments to high-income households.
Under Romney's proposal, families would receive a monthly payment of $ 350 per infant and a payment of $ 250 for a school-age child.
"American families are facing greater financial stress, made worse by the COVID-19 pandemic, and marriage and birth rates are lower than ever," Romney said in a statement Thursday as he revealed his plan. "Additionally, we haven't reformed our family support system in nearly three decades, and our changing economy has left millions of families behind."
Read more: Types of Taxes: Understanding What You're Paying and Why
When asked about Romney's proposal, DeLauro said they would listen and discuss it with lawmakers across the aisle.
"Welcome to the debate," she said. "We believe our proposal is the gold standard."
Current Child Tax Credit offers up to $ 2,000 per child 16 and under. The current balance is only partially refunded up to $ 1,400, and those who do not owe taxes must earn $ 2,500 to qualify for the balance.
"The existing child tax credit structure is so regressive that it leaves a third of American families behind," said Rep. Ritchie Torres, NY Tuesday, "the poorest families in our country."
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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