A missed opportunity: Congress fails to expand tax credits to help children, low-income workers


December 18, 2019

Moments before midnight Monday, Congressional leaders reached an agreement on an end-of-year tax package that leaves out millions of poor people. In particular, despite a tenacious push by Speaker Pelosi and allies and a welcome demonstration of at least some bipartisan support, some children in poor families remain too poor to get help from the tax code.

Advocates had hoped that Congress would expand the Child Tax Credit to cover families who are either too poor to qualify, or qualify for just a fraction of what other families receive.  Also needing help were low-income workers without dependents, the only group whose tax payments can push them deeper into poverty.  Advocates and their allies on the Hill were insisting that no tax breaks for business should be renewed or added without doing something for the lowest income children and workers.

President Trump’s 2017 tax bill was not designed with the best interests of the country’s poorest families in mind. The 2017 legislation doubled the maximum credit allowed and extended it to families earning as much as $400,000 a year – up from $110,000.

According to the New York Times, poor children are the least likely to benefit. As the struggle ensued over whether poor children would get help in the tax package, the newspaper reported that 35 percent of children fail to receive the full $2,000 because their parents earn too little. According to researchers interviewed by the Times, 25 percent of children get a partial sum and 10 percent get nothing. Among those excluded from the full credit: 50 percent of Latinx, 53 percent of African Americans and 70 percent of children with single mothers.

“The child tax credit is the largest federal expenditure for children, but it excludes from the full benefit the kids who need it the most,” Sophie Collyer, a member of a Columbia University research team that studied the benefit, told the Times. “This is a significant flaw in its design that’s at odds with the Administration’s claims about the achievements of the tax bill.”

The newspaper noted that because the Child Tax Credit rises with earnings, a single parent with two children has to earn more than $30,000 a year to collect the full amount.

Despite Congress’ failure to act, there is hope that progress will be made in 2020.  Improving the Earned Income Tax Credit for individuals and the Child Tax Credit for families has a history of bipartisan support – Newt Gingrich and Paul Ryan have backed one or another – and just this past Sunday, Sen. Mitt Romney (R-UT) joined with Sen. Michael Bennet, D-CO, to propose a credit of $1,500 per child, payable to even the poorest families.

Notes the Washington Post:

“The Bennet-Romney proposal expands the child tax credit in two key ways. First, it makes the existing credit more generous to families with children under age 6 by raising its maximum value to $2,500 (vs. $2,000 available under current law).

“Additionally, and perhaps more historically significant: The proposal would for the first time ever extend the child tax credit to the very poorest children by making the first chunk of the credit available to families regardless of income. That is, families with kids might have very low or even zero earnings (think: a single mom working toward a degree, say, or a retired couple raising their grandchildren) and still get a significant check.”

And in a departure from recent GOP orthodoxy, Romney has proposed a progressive way for paying for the expanded credit: he would close a capital gains tax loophole that currently favors the very wealthy.

Although it is quite disappointing that Congress did not take the needs of the poorest children into account as it rushes to keep government running past a midnight Friday deadline, it is heartening that Democrats and some Republicans are discussing and debating how to move forward on this issue. This could bode well for 2020.



Child Tax Credit
Earned Income Tax Credit