They may have put it aside for now, but Democrats have not given up on trying to revive their expansion of the Child Tax Credit
“People think that it’s all gone by the wayside — that hasn’t happened,” Sen. Joe Manchin told reporters. “The Child Tax Credit is still there.” | Anna Moneymaker/Getty Images.
The child credit is not completely gone, it's just reverted to what it looked like before President Joe Biden took office. Out with 2021 were provisions giving a major boost in assistance to the very poorest; increasing the maximum credit to $3,600 per child; and a monthly payment program sending checks to 35 million families.
Well, the calendar took care of that dispute for them. When Democrats’ expansion expired with the new year, the old work rules suddenly snapped back into place — as of Jan. 1, recipients must have at least $2,500 in income to claim the credit and how much they get is tied to how much they earn. It was Republicans, not Democrats, who made higher-income parents eligible for the credit, as part of their 2017 tax overhaul. And cutting them off would reduce the cost of Democrats’ proposal — they could at least partially finance benefits to more average Americans by kicking out higher-income people.
Democrats would have to dump even more from their reconciliation package to satisfy Manchin’s demands that any new benefits be made permanent and that Democrats keep the total cost of their package below about $1.8 trillion. That puts the child credit in jeopardy, since a permanent extension along the lines of what Democrats are planning would run $1.4 trillion on its own.
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What If Congress Made The Child Tax Credit Taxable?I am author of the book 'Caring for Our Parents' and senior fellow at The Urban Institute, where I am affiliated with the Tax Policy Center and the Program on Retirement Policy. I also write a tax and budget policy blog, TaxVox, which you may read at Forbes.com or at http://taxvox.taxpolicycenter.org/ Before joining Urban, I was a senior correspondent in the Washington bureau of Business Week.
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