A new analysis released by Senator Marco Rubio’s office this morning illustrates how important increasing the Child Tax Credit’s size and refundability is to the overall impact of tax reform on middle- and working-class families:
The analysis is a straightforward look at how the Big Six tax reform framework would affect lower and middle income families assuming no CTC increase (the red line), compared to the Lee-Rubio-Ivanka Trump plan of doubling the CTC and applying refundability to payroll taxes (the Green line). Rubio’s office took the extra step of showing what that means for working families in different occupations:
As I’ve noted previously, the Lee-Rubio-Ivanka plan would also help the very poor by beginning refundability at the first dollar on. Right now, the CTC has a $3,000 minimum earning requirement before it begins to phase in. Payroll refundability would eliminate that minimum, meaning someone making $3,000 per year would get about $460 back (0.153*3000) instead of $0 as is presently the case.
In August, Senator Rand Paul wrote an op-ed in which he said he’d “favor a large cut of at least 15% for every taxpayer.” The Lee-Rubio-Ivanka CTC reform would do just that, including for the majority of Americans who pay more in payroll tax than income tax. That’s perhaps why Senators Rob Portman and John Thune appear to be coming around to the plan.
With the launch of ExpandTheChildTaxCredit.com on Tuesday, it’s been great to see the conversation around tax reform finally begin to acknowledge the importance of the CTC to tax reform’s passage, and the opportunity it presents to do a lot of good for the working poor:
In addition to policymakers, DC-based think tank, the Niskanen Center, has spearheaded a coalition of liberal and conservative groups to push for the expansion with a new website, ExpandTheChildTaxCredit. Niskanen has been especially vocal about child welfare being cash-based…
On the politics side, Trump “has always talked about the forgotten American worker,” Hammond said, and “the places where he has the base of his support are the sorts of places where people pay the majority of their taxes to the payroll tax system.” A plan that helps working families that don’t make enough to owe income tax would be a much easier sell for him than one that only benefits higher-income people.
“The tax framework, the way it’s laid out, makes the entire thing hinge on the child tax credit,” said Samuel Hammond, an advocate for the credit who is an analyst at the libertarian Niskanen Center. The debate over the credit also is a window into the trade-offs Republicans are weighing as they try to make good on promises of a booming economy and middle-class tax cuts.
The new child-poverty figures come as bipartisan support is building for an expansion of the Child Tax Credit, an expansion that could potentially reduce the child-poverty rate even further. … This month, a prominent group of conservative think tanks and scholars—among them Ramesh Ponnuru of the National Review, the Family Research Council, and the Niskanen Center— launched a campaign to increase the size of the credit as well.