WASHINGTON, D.C. – Thursday, U.S. Senator of Ohio Sherrod Brown helped lead a group effort on the Senate floor which included Elizabeth Warren and Ed Markey, to call for the permanent expansion of the Child Tax Credit and the Earned Income Tax Credit in the American Rescue Plan. The group believes that expanding these credits will give tax breaks to the vast majority of families while helping those who are hurting amid the COVID-19 pandemic, and putting more money in their pockets amid the current economic downturn.
“These tax credits will make a big difference for families paying for daycare and diapers and school supplies and all the extra expenses that come up when you have children,” said Brown. “We need to make these tax credits permanent, so families have the peace of mind that money is going to be there in the years ahead.”
The expanded credit in the rescue plan issues $2,000 to $3,000 per child from 7 to 17 years of age and $3,600 for each child under 6.
In a letter to President Joe Biden that was signed by Brown, Markey, Warren, Bernie Sanders, Corey Booker, Dianne Feinstein, Kirsten Gillibrand, Amy Klobuchar, and others, the group stated that “we must not allow these critical expansions to expire after one year. Doing so would result in a significant spike in child poverty, after we have made historic strides to end it. It would mean that millions of struggling adult workers would once again be taxed into poverty. That is wrong and unacceptable. Reducing child poverty, strengthening the economic security of low-wage workers, and reducing racial income disparities through these two important tax credits must be a core part of the Recovery Plan Congress considers later this year under your leadership.”
According to Brown, the American Rescue Plan nearly tripled the earned income tax credit for workers not raising children in the home. It made the CTC fully refundable – meaning all but the wealthiest families get the full value of it.
The group wants the following to be made permanent:
Expand the so-called “childless adult” EITC. The American Rescue Plan virtually tripled the maximum credit for eligible workers not raising children in the home.
Lower the EITC eligibility age from 25 to 19 and eliminate the maximum age.
Make the CTC fully refundable. The group states that a fully refundable CTC ensures that all low-and moderate-income families receive the full value of the credit, including families living in the deepest poverty who need it most.
Boost the CTC from $2,000 to $3,000 (and $3,600 for kids ages 0 to 5). The group states that these improvements cut child poverty nearly in half, including cutting poverty among Black children by 52 percent, Hispanic children by more than 45 percent, and children in Tribes by more than 60 percent.
Distribute the CTC on a monthly basis. The American Rescue Plan provides for periodic distribution of the CTC starting in July 2021.
Ensure strong safeguards to prevent low-income families from repayment. Roughly 3 million children –many of whom are low income –change the adult they live with during the course of a given year. The group says that these low-income families should be protected from a surprise tax bill through strong safeguards (a “safe harbor”) to limit repayment. The IRS should provide a straightforward, accessible platform for filers to notify the IRS of changes in family status or income.
Return to previous law on CTC eligibility. The 2017 tax law newly required children to be issued a Social Security Number in order to qualify for the CTC.
Continue the earned income lookback option. The American Rescue Plan allows filers to substitute their 2019 income in place of 2021 income, to avoid losing the value of their EITC.