Senators Support Legislation to Improve Child Tax Credit, Reduce Child Poverty
WASHINGTON, D.C. [03/07/19]—Minnesota’s U.S. Senators Amy Klobuchar and Tina Smith said today that they are pushing a new tax cut measure that will not only put more money in the pockets of families raising children, but also cut child poverty by an estimated 38 percent in Minnesota and across the country.
The American Family Act of 2019—led by Sens. Michael Bennet (D-Colo.) and Sherrod Brown (D-Ohio) would increase the Child Tax Credit to $3,000 per child, with an additional $600 per-year credit for children under six. Further, the measure would make the tax credit fully refundable to allow all families to claim the full credit, and directs the Secretary of Treasury to administer the credit on a monthly basis to put more money in the pockets of families sooner, rather than forcing families to wait until year-end to receive the tax credit.
“We know that every dollar we invest in children comes back manyfold, and helps those children succeed throughout their lives,” said Sen. Smith. “This measure not only eases the tax burden on families raising children, but also cuts child poverty in the United States dramatically. It’s an investment in our nation’s economic future.”
“Millions of families find themselves dealing with the increasing challenges and costs of caring for children,” Klobuchar said. “The American Family Act will support middle class families and help parents get ahead without sacrificing the best possible care for their children.”
The American Family Act would replace the current Child Tax Credit with updated policy changes based on research about solutions which improve outcomes for children. The Columbia University Center on Poverty and Social Policy recently released a report that found the American Family Act would cut child poverty by 38 percent.
The bill would:
- Create a new Young Child Tax Credit (YCTC) of $300 per month ($3,600 per year) for children under six years of age, up from the current maximum of $2,000 per year.
- Expand the Child Tax Credit (CTC) to $250 per month ($3,000 per year) for children six years of age or older, up from the current maximum of $2,000 per year.
- Make both YCTC and CTC fully refundable, meaning that low-income families would receive the full credit for each child. The current CTC only begins to phase-in after a taxpayer has earned $2,500 of income and at a rate of 15 cents for every dollar of additional income. In addition, only $1,400 of the $2,000 credit is refundable. For these reasons, one-third of all children—27 million—do not currently receive the full $2,000 CTC credit.
- Help the middle-class by providing a tax credit for all individuals with children who earn less than $150,000 per year and all married couples with children who earn less than $200,000 per year.
- Index both YCTC and CTC levels for inflation (rounding to the nearest $50) to preserve the value of the credit going forward. The current CTC is not indexed for inflation.
- Call on the Treasury Secretary to set up monthly advance payments for the YCTC and CTC no later than a year after passage for taxpayers anticipated to receive a refund, helping families make ends meet during tough times.
In addition to Sens. Klobuchar and Smith, Bennet and Brown, the bill is supported by Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Ben Cardin (D-Md.), Bob Casey (D-Pa.), Chris Coons (D-Del.), Catherine Cortez Masto (D-N.V.), Tammy Duckworth (D-Ill.), Dick Durbin (D-Ill.), Kirsten Gillibrand (D-N.Y.), Kamala Harris (D-Calif.), Maggie Hassan (D-N.H.), Martin Heinrich (D-N.M.), Mazie Hirono (D-Hawaii), Doug Jones (D-Ala.), Pat Leahy (D-Vt.), Ed Markey (D-Mass.), Bob Menendez (D-N.J.), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Patty Murray (D-Wash.), Gary Peters (D-Mich.), Jack Reed (D-R.I.), Bernie Sanders (D-Vt.), Brian Schatz (D-Hawaii), Jeanne Shaheen (D-N.H.), Debbie Stabenow (D-Mich.), Jon Tester (D-Mont.), Chris Van Hollen (D-M.D.), Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.).
The following organizations have endorsed the American Family Act: Center for American Progress, Center on Budget and Policy Priorities, Center for Law and Social Policy, Child CareAware of America, Children’s Defense Fund, Community Change Action, Economic Security Project, First Focus, MomsRising, National Association for the Education of Young Children, National Women’s Law Center, Niskanen Center, Service Employees International Union, Zero and to Three.