Democratic Congressmen plan to introduce a bill that will distribute US $3600 per year for each child that is less than 6-year-old and US $3000 per year for each child that is older than 6 and younger than 17.
The 22-page bill, which is a part of President Biden’s coronavirus relief package, is set to be adopted on Monday.
The modified version of the Child Tax Credit Bill is being advanced by Representative Richard Neal, who serves as a Chairman of the Ways and Means Committee.
Neal tried to explain that the bill comes as a response to the devastating effects of the COVID-19 pandemic which made American families much poorer.
He said that the bill has the potential of helping people who would have otherwise been left without food or shelter.
Only if you earn less than 75K a year, or 150K a year as a couple
According to the bill, Internal Revenue Service is going to provide families with equal amounts of up to the US $300 support each month.
Yet, the full benefit of the bill will hold only for the individual parents who earn less than the US $75,000 per year and for couples that earn less than $150,000 annually.
For the families above these thresholds, the amount of the support will be less. If passed, the bill is expected to come into effect in July.
The bill presents some important changes from the current Child Tax Credit.
First of all, unlike the current credit that has only been partially refundable, the tax credit sponsored by the new bill is set to be completely refundable.
This means that the families that owe taxes will be given a full refund of the amount above their tax debt.
Low-income households will find this feature of the bill especially beneficial as most of them currently receive little to no tax credits.
Another modification involves an increase in the amount to be allotted to each family.
Whereas the new bill plans to give at least US $3000, the current policy assigned provides up to US $2000 per child younger than 17.
Also, the current bill included a single payment of the relief amount.
A huge financial burden on the budget
Yet, the bill is expected to present a significant financial burden on the budget of the United States.
This is why many Republican congressmen, worried about the effects on the national debt, voiced their skepticism about the bill.
Senator Pat Toomey of Pennsylvania, for example, referred to pro-Democratic economist Larry Summers who described the bill as too costly even though he has traditionally been in favor of the large government spending.
With additional costs, such as the US $160 billion to be used for the national vaccination program and the increase to the US $400 per week for unemployment benefits, the bill is likely to contribute to an additional deficit.
This will put an additional strain on the record high deficit of over US $3.1 trillion that the U.S. hit last year.
On the other hand, some Democratic Representatives, such as Rosa DeLauro of Connecticut, Suzan DelBene of Washington, and Ritchie Torres of New York, see the introduction of a bill as an opportunity to make permanent poverty-fighting amendments to the legislation.
Some of them have been campaigning for years to make such measures the norm.
It remains to be seen which side will prevail in the long run.
What is clear is that many Democrats view this bill as an opportunity to remain in their positions after the upcoming 2022 congressional elections.