President-elect Biden’s COVID plan includes tax cuts for parents
BATON ROUGE, La. (WAFB) - President-elect Joe Biden’s $1.9 trillion coronavirus aid package includes billions in temporary tax cuts for working parents that could cut child poverty by as much as 40 percent, experts say.
Though it’s not been drafted into a bill and the details are not final, Biden’s proposal aims to extend the Child Tax credit to most parents. Under current law, some 27 million American parents do not make enough money to capture the credit’s benefit.
Families would get a $3,000 credit for each child older than 6 but younger than 18, and $3,600 per child under age 6. Biden would make the credit fully refundable, meaning families that owe nothing in taxes could collect the credit as a refund.
But there is a push in Washington, D.C. to give parents an advance on that money by mailing them monthly checks. Instead of receiving a lump sum on their tax refund, the value of the credit would be divvied up over the year.
For example, a family with three children all under 6-years-old might receive a $900 check each month.
The Child Tax credit expansion would be worth up to $100 billion, but would only be in place for a single year.
“If we don’t do these things now - if children grow up in poverty, it is going to cost us more in the long run,” Louisiana Budget Project head Jan Moller said. “An investment today in reducing child poverty is also an investment in the future economy.”
Biden would also expand the Child Care Tax credit, which primarily benefits upper-middle class families. Parents could write off up to $4,000 in child care expenses, up from $3,000.
That credit would also become fully refundable.
The “American Rescue Plan” also throws a bone to workers who make low wages, including millions in the service industry, by beefing-up the Earned Income tax credit.
Biden would make more Americans eligible for the credit by raising the income cap to $21,000. He’d triple the credit’s value for single, childless workers and remove the age cap so elderly workers could qualify.
It would remain fully refundable.
“People who get these tax credits don’t put the money in the bank or go to Barbados on vacation,” Moller said. “They use it to buy groceries, clothes, and to pay the rent or take care of basic expenses. I think you’d be doing the economy a world of good.”
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