Personal finance

Parents and children participate in a demonstration organized by the ParentsTogether Foundation in support of the child tax credit portion of the Build Back Better bill outside of the U.S. Capitol on Dec. 13, 2021.
Sarah Silbiger | Bloomberg | Getty Images

President Joe Biden’s proposed budget for fiscal 2024 includes a host of proposals aimed at helping families.

That includes one key proposal — the reinstatement of the enhanced child tax credit that temporarily gave qualifying parents up to $3,600 per child for 2021 through the American Rescue Plan.

Biden’s plan calls for raising the current maximum child credit from $2,000 per child to $3,600 per child under age 6 or to $3,000 per child ages 6 and up.

The budget also calls for permanently making the child tax credit fully refundable, which means people would still be eligible even if their tax liability was less than the credit amount.

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The enhanced child tax credit — including monthly payments of up to $300 per child — helped to cut poverty in half, the “lowest level in all of American history,” Biden said in a speech on the budget on Thursday.

“We were really pleased to see that the White House is redoubling its efforts to support this direct cash payment program,” said Anna Aurilio, federal campaign director at advocacy organization Economic Security Project Action.

The move to expand the credit would be accompanied by other policy proposals in the president’s budget aimed at helping both individuals and families.

The earned income tax credit would be permanently expanded for childless workers, with the goal of keeping low-paid workers out of poverty.

The plan calls for 12 weeks paid family and medical leave, as well as seven paid sick days for all workers. It also aims to expand access to affordable childcare and free preschool. The budget also calls for expanding Medicaid home and community-based services, which would allow older and disabled individuals to stay at home, providing relief for family caregivers and home care workers.

“It’s going to help millions of parents go to work, knowing their children are being taken care of,” Biden said of the budget on Thursday.

Admittedly, the proposals — including the push to renew the expanded tax credit — may be difficult to get through Congress.

Biden aims to up benefits, slash the deficit

With the budget, Biden is aiming to cut deficits by almost $3 trillion over 10 years.

An analysis by the Tax Foundation found the expanding the child tax credit for three years, creating a monthly payment option and making it permanently fully refundable would cost more than $429 billion over 10 years. The earned income tax credit expansion for workers without qualifying children would cost about $156 billion.

However, other research suggests the government spending may have positive effects.

For every $1 spent on the child tax credit would result in $10 in benefits to society, according to Columbia University’s Center on Poverty and Social Policy.

The child tax credit just wasn’t big enough to have an impact on inflation, but it was big enough to help families meet rising costs.
Anna Aurilio
federal campaign director at advocacy organization Economic Security Project Action

“People support it,” Aurilio said. “It’s wildly popular, especially right now.”

That is as inflation has pushed prices for everyday items higher than it has in decades.

While some argue stimulus efforts like an enhanced child tax credit would fuel inflation, other experts say that is not true.

“The child tax credit just wasn’t big enough to have an impact on inflation, but it was big enough to help families meet rising costs,” Aurilio said.

In an open letter to Congressional leaders in December, more than 200 economists argued renewing the 2021 child tax credit would help low- and middle-income families cope with rising costs and help promote better economic health.

“Extending the expanded child tax credit is one of the easiest, most effective and direct tools currently at our disposal to help families deal with the impact of inflation on family budgets,” they wrote.

But getting a new policy passed won’t be easy, Aurilio said. “K Street is lobbying hard to revive tax breaks for corporations.”

“We’ve been saying all along that that shouldn’t happen unless Congress also provides relief to families and workers by expanding the CTC and EITC,” she said.

While some Democratic leaders have championed the policy, other leaders, like Sen. Mitt Romney, R-Utah, have led efforts for a more streamlined universal child benefit.

“The biggest challenge I think for Republicans or Democrats will be how you’re going to pay for it,” Romney said in an interview last year. ”And my own view is that one, by economizing on how large the program is.”

Romney also called for potentially repurposing funds from other benefits, like the child portion of the earned income tax credit.

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