Bipartisanship is a much-celebrated virtue in American politics, despite the fact that over the past several decades “bipartisan consensus” has often produced more harm than good: financial deregulation, military adventurism, and fiscal austerity. On occasion, though, Republicans and Democrats actually agree on the need to solve problems rather than create them, and the latest instance of such convergence has been on the issue of federal support for families with children. Elected officials from both major parties have recently advanced surprisingly progressive proposals that, however imperfect, have shifted the policy discussion in a way that seemed unimaginable just a few years ago.
The American Rescue Plan (ARP), passed by Congress and signed into law by President Biden in March, temporarily overhauls the federal child tax credit (CTC), increasing the maximum credit amount from $2,000 to $3,600 for children under age six, and to $3,000 for children from ages six to seventeen. (Until now, only children up to age sixteen could be claimed.) The credit has also been made fully refundable, meaning that parents whose tax bill is smaller than the amount for which they are eligible can receive the difference as a payment from the government. For example, a family with a child under six that is eligible for the full $3,600 credit but owes only $3,000 in federal income taxes would receive a refund for $600.
In addition, parents entitled to refunds will be able to collect them in advance installments throughout 2021 rather than having to wait until tax-filing season in 2022. Although these changes to the CTC are scheduled to expire after one year, President Biden and other Democrats in Congress have asked for them to be extended, perhaps permanently, in future legislation.
While the ARP was still being drafted and debated, Republican Sen. Mitt Romney of Utah released a counterproposal called the Family Security Act (FSA), which would eschew tax credits altogether and instead establish a child allowance—a direct monthly cash payment to most families with young children. This from a man who, during his 2012 presidential campaign, had complained that nearly half of Americans were supposedly “dependent upon government.”
Under Romney’s scheme, the federal government would send parents a monthly check for $350 for each child under six and $250 for each child between six and seventeen, with a limit per family of $1,250 a month. High-earning families would receive smaller allowances, and those above a certain income level would receive no allowance. These amounts are comparable to those offered by the new CTC. Romney has proposed offsetting the cost of this plan by eliminating or scaling back existing tax breaks and social-welfare spending, including the deduction for state and local taxes and the Earned Income Tax Credit (EITC).
In late April, Republican Sen. Josh Hawley of Missouri debuted his own plan for a new Parent Tax Credit that would supplement the existing CTC and also be fully refundable and paid out in monthly advances. Single parents with at least one child under the age of thirteen would be eligible for $500 a month; married couples with at least one child under thirteen would be eligible for $1,000 per month. The credit would not phase out for those with higher incomes—though to qualify, household earnings in the previous year would have to be at least $7,540, regardless of whether you are a single parent or a couple who files a joint tax return. In the press release describing his bill, Hawley states that his intention is to “create an explicit marriage bonus of 100 percent,” as well as to encourage stay-at-home parenting. “Although most American families believe children are better off when one parent stays home to care for them,” he writes, “current federal childcare programs and policies force both parents into the labor market and require children be enrolled in formal commercial childcare.”
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