As the TCJA expiration nears, lawmakers face difficult choices in reforming the CTC. While revenue, distributional and economic effects are important, lawmakers should also focus on simplifying the rules and reducing the administrative challenges.
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As we near this year’s “lame duck” session of Congress, there has been renewed interest in reforming the child tax credit as part of a tax deal. Our new analysis highlights the trade-offs that policymakers will face
Efforts to improve the taxpayer experience should focus on the IRS’s operations and include structural improvements to the tax code.
As the deadline for tax filing nears, the IRS faces scrutiny for its backlog of returns, inaccessible taxpayer service, and delays in issuing certain refunds.
Expanding the generosity of tax credits for lower-income individuals can help make the tax code more progressive, but it also reduces federal revenue. Pairing a credit expansion with a tax offset may sustain federal revenue but can also hamper economic growth.
We take a closer look at the most extensive of these proposals: restructuring the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) based on the Family Security Act proposed by Sen. Mitt Romney (R-UT) in February.
Marginal Tax Rates on Labor Income Under the Democratic House Ways and Means Child Tax Credit Proposal
The coronavirus relief legislation passed out of the House Ways and Means Committee would significantly expand the child tax credit for 2021, from its current $2,000 maximum to a fully refundable $3,600 for children 6 and under and $3,000 for children over 6.
Sen. Mitt Romney’s Family Security Act would replace the Child Tax Credit with a monthly child allowance administered by the Social Security Administration, making the benefit more generous and accessible to low-income households without earned income.
House Ways and Means Democrats recently released a proposal to expand the child tax credit for one year as part of President Biden’s larger $1.9 trillion economic relief package.
Sen. Romney’s Child Tax Reform Proposal Aims to Expand the Social Safety Net and Simplify Tax Credits
Sen. Mitt Romney (R-UT) recently proposed the Family Security Act, which features a new, more generous child allowance for families with children while reforming other sources of aid for low-income individuals.