Law Child Tax Credit Thread: Expansion not included in Omnibus/ will expire for 2022

[Lead]

Updated Post 12/20/22
Looks like that's a wrap for this chapter of the CTC expansion. It didn't make it into the upcoming Omnibus bill which almost certainly means it will expire in 2022. The last ditch effort made it pretty unlikely as a ton of moving parts are going on at the moment to pass the omnibus and usually the things that make it in need to have wide bipartisan support to get through and I think CTC expansion even with work requirements would be iffy on 60 votes without me knowing the roll call.

Child tax credit expansion not included in omnibus package
The Hill

A child tax credit (CTC) expansion is not included in the $1.7 trillion omnibus funding bill that congressional lawmakers expect to pass this week, despite Democrats listing it as a top priority during negotiations with Republicans.

In exchange for a renewal of expanded child tax credits, Democrats had offered a deal to GOP lawmakers that would have awarded tax credits for big business.

Michael Bennet (D-Colo.) on Tuesday said, “Republican leaders decided to send a lump of coal to America’s children this year.”

“Over the last few weeks, Republican leaders in Washington refused to even discuss a deal that would benefit America’s kids and businesses,” Bennet said in a statement. “They were absent from the negotiating table, and the coming year will be much harder for America’s families as a result.”

The bonus depreciation/ R&D credit the GOP wanted also didn't get included.


Updated Post 12/12/22

Final stretch for 2022 and a last ditch effort for keeping the expanded CTC in place. If this expires, it would be the first time we saw an expansion not remain in place. Talks stalled most of the year because Democrats wanted to keep the credit as is, being fully refundable while Manchin and many of the keys Republican voted in the senate wanted to keep a work requirement to it (non-refundable). Since it’s down to keeping something from the expansion or nothing at all, Biden has signaled an okay on moving toward a work requirement. It also appears part of the deal would be corporate tax breaks for corps. Unsure where the finding for either of this is and kinda funny because the article phrases the corp breaks as the offset (in deal making) when I was expecting it to explain the funding mechanism. Now keep in mind this will be less expensive then the original expansion because of the work requirement. No work requirement adds 19 million more families into the equation. So it will be cheaper but democrats likely won’t be fully happy as those 19 million are likely more central to what reduced child poverty in 2022. One final thing here is this credit in 2021 was given out months once it was passed in the summer. If this goes though end of year, families will be seeing a lump sum payment in their tax return since there were no monthly prepayments. This is all still developing but I wonder if there’s an expectation on this impacting inflation as well.
https://www.politico.com/news/2022/12/12/white-house-expanded-child-tax-credit-00073392
Let’s make a deal: White House ready to bargain over expanded Child Tax Credit
Politico

The White House has privately signaled to Democrats that it would support a compromise deal to revive the expanded Child Tax Credit, even if it includes work requirements it once opposed.

A remarkable shift for an administration that has resisted applying such conditions to anti-poverty programs, it comes amid a recent push in Congress to include an expansion in a year-end legislative package while Democrats still control both chambers. And it reflects the growing urgency within the administration to salvage a policy that ranks among President Joe Biden’s signature achievements.

Updated Post 7/16/22
Looked into this a few weeks back and found states (Utah) have been playing around with this idea. Looks like a federal bill is now being proposed.

Rubio proposes child support regulations beginning at conception
The Hill

Senators Marco Rubio (R-Florida) and Kevin Cramer (R-North Dakota) introduced a bill Wednesday that would allow mothers to collect child support beginning at conception.

The bicameral bill would amend the Social Security Act “to ensure that child support for unborn children is collected and distributed under the child support enforcement program.” said of the bill.


Eight Republican senators are cosponsoring the bill, including Sens. Steve Daines (R-Mont.), Jim Inhofe (R-Okla.), Cindy Hyde-Smith (R-Miss.), Marsha Blackburn (R-Tenn.), Rick Scott (R-Fla.), Roger Marshall (R-Kan.), James Lankford (R-Okla.) and Roger Wicker (R-Miss.).

Posting about it here instead of a new thread because this is a package which also expands the child tax credit and funding for WIC. Didn't see the details on CTC, but my guess is it raises the credit but keeps most of it non-refundable/ tied to work.

The framework includes proposals to expand the child tax credit, provide additional funding to the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) and make the adoption tax credit fully refundable, among others.

Another interesting bit on this is a poll found the support for child support at conception was virtually identical(TM) between parties but overall looking pretty favorable between support vs. against:

The poll found that about half of respondents favored the payments beginning at conception, including 53 percent of Democrats, 47 percent of Republicans and 40 percent of independents.

Twenty-eight percent of respondents opposed a child support expansion, while 25 percent said they were unsure.

Updated Post 6/17/22
Romney has issued a revamp of his original CTC expansion proposal with the Family Security Act 2.0. This has two other GOP co-sponsors Burr (NC) and Daines (MT). Factor in, Rubio and Lee have interest in a credit similar to this idea which is tied to work along with Cotton and Hawley who have their own individual proposals, and you can see how there is some room for possible legislation in the senate since the end of the 2021 one year expansion credit.

Romney, Burr, Daines Announce Family Security Act 2.0

U.S. Senators Mitt Romney (R-UT), Richard Burr (R-NC), and Steve Daines (R-MT) today announced the Family Security Act 2.0, an updated version of Romney’s Family Security Act to create a new national commitment to American families. The pro-family, pro-life, and pro-marriage plan would modernize antiquated federal policies into a fully paid-for, cash benefit for working families starting during pregnancy, amounting to $350 a month for each young child, and $250 a month for each school-aged child.

“Despite being the bedrock of our country, there’s perhaps never been a more challenging time than today to raise a family,” Senator Romney said. “It’s no coincidence that fewer and fewer people are getting married and having children. We must do better to help families meet the challenges they face as they take on the most important work any of us will ever do—raising our society’s children. This proposal proves that we can accomplish this without adding to the deficit or creating another new federal program without any reforms. I look forward to working with my colleagues in the coming months to continue improving this plan to best meet the needs of families across the country.”

“Over the last few years, American families have faced unprecedented difficulties that have disrupted their daily lives – from a global pandemic to widespread school closures to historic inflation,” Senator Burr said. “These challenges made it clear that too many parents lack the financial and social support necessary to provide security for their children. Possibly even worse, many Americans want to start a family, but feel they simply can’t afford to. Strong families are not a luxury; they’re essential to a healthy, stable society. We need to update our family support system to reflect the problems parents face today and to encourage more people to start thriving marriages and families. I’m glad to join Senator Romney in this effort, and hope the Senate will consider the timely and important ideas proposed in this framework.”

This just was released but it looks at first glance:
-Tied to work unlike the CTC expansion in 2021
-Has some changes that benefit jointly filing couples vs single parent filings
-Credit begins at a point in pregnancy rather than after birth
-Monthly payments would be done through SSA rather than the IRS, an administration which is built on processing monthly payments vs the IRS who had to work a process into place last year to get the CTC revision to work
-It's cost is offset by other benefits already in existence like the dependent credit and the remaining portion of the SALT deduction

More details of the structure here:
Analysis of the Family Security Act 2.0
Niskanen Center

Policymakers are looking for ways to break the stalemate over extending temporary enhancements to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) that have now expired. Today, Republican Senators Mitt Romney, Richard Burr, and Steve Daines released a proposal that shows a possible way forward: the Family Security Act 2.0. It’s the latest iteration of a previous Romney proposal aimed at supporting families and simplifying an array of family-related tax benefits. This report provides a preliminary analysis of the reform package.

We find that the new Romney plan would reduce marriage penalties built into several existing family tax benefits and reduce child poverty by 12.6 percent. The proposal also reduces complexity in the tax code by reforming or consolidating five distinct tax benefits — the CTC, EITC, Child and Dependent Care Tax Credit, Head of Household filing status, and State and Local Tax deduction — into just two: an enhanced child benefit and simplified EITC.

Updated Post 9/17/21
We already saw Lee/ Rubio push back at keeping the majority of the CTC tied to tax liability. Now Manchin is also taking that stance in the debate about it's extension past 2021. Kinda odd where you have two sides being Lee/ Rubio/ Manchin and the other side Romney/ Biden/ Dems, though Romney's plan definitely had differences in offsetting other entitlements for his proposal.

Joe Manchin Thinks Parents Should Have To Work For Child Tax Credit
HuffPost

Sen. Joe Manchin (D-W.Va.) suggested Sunday that he’s fundamentally opposed to a key part of the Democratic agenda: monthly benefits for parents.

Since July, the federal government has been sending most parents monthly cash payments, a revolutionary policy that could slash child poverty ― but the payments will stop after December if Congress doesn’t pass a new law to keep them going.

Manchin voted for the American Rescue Plan, which started the payments, but is now evidently having second thoughts, saying the program should be more “need-based” and helpful to parents.

“There’s no work requirements whatsoever,” Manchin said on CNN’s “State of the Union,” where he outlined his opposition to his party’s plans for higher corporate taxes to pay for more social spending.

“There’s no education requirements whatsoever, for better skill sets,” Manchin said. “Don’t you think, if we’re going to help the children, that the people should make some effort?”

 

[Lead]

Updated Post 4/20/21
Biden to Back Temporary Extension of Larger Child Tax Credit
Wall Street Journal

President Biden told a group of lawmakers that he intends to propose a temporary extension of an enhanced child tax credit, rebuffing requests from some Democrats who favor making the new benefit permanent.

As part of a $1.9 trillion Covid-19 relief package Democrats passed earlier this year, Congress raised the child tax credit to $3,000 from $2,000, setting it at $3,600 for parents of children under age 6 and making parents of 17-year-olds eligible. The credit, which scales down above certain income thresholds, is fully refundable and was designed to be paid in intervals, rather than in one lump sum.

But the expansion of the tax credit, which advocates said would slash child poverty in the U.S. in half, is only set to last through 2021, and some Democrats have sought to make it permanent. Mr. Biden had previously signaled he might also back a permanent expansion.

At a meeting at the White House on Tuesday with members of the Congressional Hispanic Caucus, Mr. Biden said that he expects that proposing a permanent expansion of the tax credit would run into trouble in the Senate, according to lawmakers at the meeting. When Rep. Teresa Leger Fernandez (D., N.M.) said she asked Mr. Biden about making the expanded tax credit permanent, Mr. Biden said he planned to propose extending it by several years.

Plan to do a temporary extension until 2025, which seems like it would run to around 400B if it's equivalent to what this years cost was. I think there will be a lot of pressure to extend this once the monthly payments begin. A lot of people will see the checks and be in favor of it continuing. There isn't an increased taxation tied to this current one year expansion of the credit.


Updated Post 3/12/21
So the 1.9T relief bill is going out, the temporary provisions to the Child Tax Credit are in place now.

Key takeaways:
-The credit is increased from 2,000 to between 3,000-3,600 dependent on the childs age
-The credit use to only be partially refundable (1,400 out of the 2,000). This year, the full amount will be, meaning you can receive the entire credit even if your tax liability is less than the credit.
-A very big piece here, the credit will be paid out monthly rather than received when filing one's tax return. Since the year already kicked off, monthly payments will begin in July and the first half will be paid out on the return. I think there are some complications to W-4 elections here but it will get the money to people faster, which you would think is the point since it's tied to a relief bill.
-The expanded portion of the credit (above 2,000) had an income limit of 75k/single or 150k/married similar to the stimulus payments. The 2k part of the credit which already existed prior to this is still available to those making 100k/single 200k/married.

This sets the stage for a permanent restructuring/ possible expansion to the credit. Though there are divisions with republicans here, it seems like democrats may get some votes if there are supporters behind the Romney plan which isn't too different from this temporary measure but does have different means in funding it (cuts to other programs like SNAP, eliminating SALT tax deduction, etc). Lee and Rubio came out against the refundable piece being expanded and want to keep it related to earning enough income to generate that level of tax liability. You would think near the end of 2021 there will be pressure to come up with a permanent solution. You could argue the Biden administration has successfully taken a piece of the relief bill legislation and used it to be able to springboard into a permanent policy measure. Time will tell.


Child Tax Credit: Millions of parents could soon get up to $3,600 per child
CBS

The $1.9 trillion stimulus bill is aimed at shoring up the pandemic-stricken U.S. economy through tried-and-true fiscal measures like expanded unemployment aid and direct stimulus checks. But the legislation also includes a relatively novel measure that offers a form of guaranteed income to parents of children under 18, or what one expert calls "a baby step toward universal basic income."

That's because the relief bill includes an overhaul of the Child Tax Credit (CTC), a 24-year-old part of the nation's tax law that today primarily benefits middle- and upper-income families. The American Rescue Plan overhauls the CTC by expanding the benefit from $2,000 annually to as much as $3,600 per child. It also includes more low-income households and doles out the credit's benefit through monthly cash payments.

Those changes could have a major impact on millions of families, especially low-income households and those whose earnings can fluctuate from month to month. More than 4 million children could be lifted out of poverty, particularly children from Black or Latino families, according to analysis from the Center on Budget and Policy Priorities.

Original Post 2/6/21
This all kicked off with the 1.9T stimulus bill that passed the Senate, there was a one time expansion of the Child Tax Credit.

The history of the credit began in 1997, when the Clinton administration and the GOP congress passed a $400 credit into law. It was expanded to $1,000 under the Bush tax cuts in 2001 and made permanent by the Obama administration in 2013. In 2017, the Trump administration increased it to $2,000 where it sits today.

For those who don't know about the current credit, it's $2,000 for any child under 17 claimed as a dependent. The child also has to have a social security number and have lived with the filer for at least six months during the year. The credit phases out a 400k joint and 200k single/ HOH status filers. A decent portion ($1,400) of it is refundable, meaning you can still receive the credit even if it exceeds what your tax liability but you do have to make some money within in the year to qualify ($2,500).

So with the stimulus, Biden increased the credit for a year to $3,000 per child under 18 or $3,600 under age 6. Additionally the credit is fully refundable and takes out that $2,500 income requirement to be eligible.

With that piece, the discussion on the issue is just heating up, as new Senate proposals are coming for permanent restructuring of the credit.

With democrats, Rep Suzan DelBene, Rep Richard Neal, and Sen Michael Bennett have been focused on this policy pre-COVID with pieces in a larger bill (HEROS Act) that would've temporarily made the complete credit refundable. Additionally Sen Cory Booker and Rep Ayanna Pressley have been pushing a bill (American Opportunity Accounts Act) early as 2018 for "Baby Bonds" which would place money in an account for every child that would eventually total to ~36,000 by 18, where they would have access to the funds for certain uses (home buying, education, starting a business.)

With republicans, this has only been an interest to some in the past (Sen Lee, Sen Rubio). For example, the counter stimulus proposal the GOP presented at ~600B did not include a one time Child Tax Credit. With the recent passing of the stimulus, Sen Romney has proposed a bill (Family Security Act) which would permanently increase the credit to $3,000 per child (under 17 I believe) and $4,200 under the age of 5. One key piece to this legislation is it wouldn't be in the form of a tax credit but rather, monthly payments through the Social Security Administration. The is also something Democrat's were hoping for with the temporary credit but due to timing isn't expected to transpire so there is likely interest in whatever permanent bill they propose to also do it monthly.

The big differences between the bills are going to be what (if anything) is taken away as an offset. Though I don't think we have a full picture of the democrat version that will be pushed yet, Romney's definitely makes cuts in other places. Part of his proposal would cut the Child and Dependent Care Credit, Temporary Assistance for Needy Families Program and the Head of Household tax status, adjustment eligibility for SNAP benefits, and eliminate the "SALT" (State and Local Tax) deduction completely.

All Child Tax Credits (or Earned Income Tax Credits) have eventually gone on to be permanent in one form or another so the odds would favor. The COVID situation is meant to be temporary however so maybe this time is different.

Pro arguments for CTC: The main purpose for the credits are to reduce child poverty. Different studies have pointed that the use of these benefits can lead to improvements of the child's upbringing like an increase in household spending on food. Additionally, with developed countries having a lower birthrate, this would allow for domestic population growth.

Con arguments for CTC: The main con I have seen is it could discourage work. Additionally, the funds possibly could go to benefit the filer rather than the child in bad family circumstance.

I'll say the majority of what I found/ read had net positive arguments/ viewpoints on this type of benefit.

What are your thoughts on the debate? Is an expansion of this benefit needed at this point in time beyond COVID relief? Is this the type of credit you think is preferable or not for a tax system?

Further Reading:
Democrats sense momentum for expanding child tax credit by The Hill
Biden's Stimulus Plan Includes $3,000 Child Tax Credits by Kiplinger
Biden Low-Income Tax Proposal Follows Path to Becoming Permanent by Bloomberg Tax
Romney, Biden and Booker Want To Fix Child Poverty. Which Plan Is Best? by Forbes
Romney proposes child care benefit for families, fueling Democrats' push by Politico
Mitt Romney unveils plan to provide at least $3,000 per child, giving bipartisan support to President Biden’s effort by Washington Post
Sen. Romney’s Child Tax Reform Proposal Aims to Expand the Social Safety Net and Simplify Tax Credits by The Tax Foundation

 

[Lead]

Spoiler

Reserved

 

[Fluffernutter]

Will this encourage people to have more kids?

 

[Lead]

Will this encourage people to have more kids?

It is one argument for the credit. I've found better studies focused on reducing child poverty/ benefiting the child's wellbeing compared to anything on a birthrate spike though. I also think it's a little early to know if there will be a COVID birthrate spike.

 

[MoparOrNoCar]

More evidence that the Trump administration did nothing. Right @Cid ?

 

[Deorum]

Will this encourage people to have more kids?

No, thanks. This is pretty sad though.

 

[freakroor]

a small pittance.

 

[Lead]

No, thanks. This is pretty sad though.

Are they able to grab data before the birth to know the next coming months won't change? It's antidotal but there has been a decent spike (maybe 3 fold) of people planning paternity leave later in the year.

 

[llperez22]

im generally for it because any real parent who raises there kid right and isnt financially well off could really use the money to help with things like day car, food for the kid etc.. that will help the parent continue to work or get an education and generally continue to be contributing members to society that helps everyone in the big picture. At least thats the ideal I suppose. Of course there will be shit parents who will use the money to buy cigarettes and beer and just be an even further drain on society via taking more tax money.

Another more pessimistic angle is that humans in general are a drain on the world and nature and we shouldnt promote child birth just because it results in more consumers/tax payers to keep the system moving. Plus it helps parents who have multiple kids they cant afford while not doing nearly as much to help responsible adults who wait until they are ready to have a kid. So I can see both sides

 

[Lead]

More evidence that the Trump administration did nothing. Right @Cid ?

One items I found a little funny about the Bloomberg article under there history part (linked above):

And the Child Tax Credit began as a $400 credit in 1997. The credit slowly increased to $1,000 during the George W. Bush administration, at which point it also became partially refundable.

Doesn’t bother with an additional sentence to mention it doubled in 2017. That timeline is interesting though. We’ve had four administrations in a row expand it in one way or another. Clinton actually came out approving that Obama should reinstate the Bush tax cuts before Obama came around to it. It’s also possible part of that was negotiation though.

 

[Chillin' Nuts]

Another more pessimistic angle is that humans in general are a drain on the world and nature and we shouldnt promote child birth just because it results in more consumers/tax payers to keep the system moving. Plus it helps parents who have multiple kids they cant afford while not doing nearly as much to help responsible adults who wait until they are ready to have a kid. So I can see both sides

Philosophically I can agree that it's a bit sad to promote and encourage people having kids for this reason but from a practical level without that replacement population lots of things go to shit.

 

[Fluffernutter]

You mean baby momma's?

What do you think?

I'm not sure. There could be a lot of variables at stake:

- larger families.
Or
- smaller families because the extra money could encourage stay at home parents to go back to work earlier since this could help with child care expenses.

 

[Long Dark Blues]

No, thanks. This is pretty sad though.

I read a while ago that something like 2/3 of all women use some form of birth control, including having a sterilized male partner.

 

[MeatheadMike]

Americas birth rate is the lowest it’s been in decades, which will make it difficult to sustain its aging population down the line.

To fix this we either need more immigration to pick up the slack, or need to help make it easier for the native population to increase the birth rate. Ironically both of those things seem to be somewhat frowned upon by the right, but at least there seems to be bipartisan support for the child tax credit.

 

[Deorum]

Everyone one is now trans gay.

That's no excuse.

I'm gay AF and still made baby, albeit when I was 19.

<{chips}>

I read a while ago that something like 2/3 of all women use some form of birth control, including having a sterilized male partner.

Were you getting chicks preggers in high school? I thought I saw you mention you have a 20-year-old the other day and you aren't even 40 IIRC. I'll probs be a fucking grandpa within the next ten years too before I hit that age the way these little girls are all over him. I'm no genetic dead end.

 

[Fluffernutter]

It is one argument for the credit. I've found better studies focused on reducing child poverty/ benefiting the child's wellbeing compared to anything on a birthrate spike though. I also think it's a little early to know if there will be a COVID birthrate spike.

Back in March, my gut felt like there would be more relationships breaking up than babies being born due to Covid-19

 

[Lead]

Philosophically I can agree that it's a bit sad to promote and encourage people having kids for this reason but from a practical level without that replacement population lots of things go to shit.

Generally, undeveloped populations have higher rates because many of their kids die before adulthood. The global population boom largely was due to countries that moved to the developed over a generation without realizing all their kids would be able to make it to adulthood so it somewhat is unintentionally for any average family around the world to have more than maybe 2-4 kids.

 

[Long Dark Blues]

Were you getting chicks preggers in high school? I thought I saw you mention you have a 20-year-old the other day and you aren't even 40 IIRC. I'll probs be a fucking grandpa within the next ten years too before I hit that age the way these little girls are all over him. I'm no genetic dead end.

Yep, I was a 17 and a junior in high school when my first son was born. Had my second son at 26, he's now 11.

My parents became grandparents at 36.

 

[Lead]

Could we just get help for people crushed during the pandemic FFS.

We’ve had 4 large bills passed covering covid relief over the span on 9 months. I don’t agree on everything that came through on them but there was and still is significant unemployment assistance in place.

Back in March, my gut felt like there would be more relationships breaking up than babies being born due to Covid-19

Yea, it probably just amplified how a current relationship was already going. Stable ones did good and dysfunctional ones probably came to a tipping point.