President Joe Biden wants to permanently increase federal child tax credit from maximum $ 2,000 to at least $ 3,000
The increase in the child tax credit in President Joe Biden’s $ 3.5 trillion social spending bill could drive 1.5 million workers – or 2.6% of all working parents – To quit the American workforce altogether, according to a study released on Friday.
Biden’s U.S. Plan for Families, part of his extensive Build Back Better program, would increase the maximum child tax benefit to $ 3,000 per child aged 6 to 17 and to $ 3,600 for children under 6 years.
The current maximum credit is $ 2,000, doubled by $ 1,000 by Donald Trump’s Tax Cuts and Jobs Act.
Currently, parents must report an annual income of at least $ 2,500 to be eligible.
The Democrats’ proposal removes the minimum income requirement. A parent with two children under the age of 6 and no reported annual income would be eligible to receive $ 7,200 from the federal government per year under Biden’s plan.
Federal investments in American families have been a main talking point for Democrats and Biden officials promoting the bill.
Democrats are looking to make Joe Biden’s temporary increase in the child tax credit as part of the US bailout permanent. Under the current U.S. tax code, the normal maximum tax credit for children outside the pandemic is 2,000
Vice President Kamala Harris today visited a daycare class in New Jersey. She is also participating in a panel discussion on the importance of federal dollars spent on child care.
But according to the University of Chicago study, the tax credit increase is unlikely to have as big an impact as Democrats hope.
Without taking behavioral responses into account, the researchers claim that child poverty would be reduced by a third and that deep child poverty would decrease by 39%.
Deep poverty refers to households with incomes below half of the existing poverty line, according to the US Census Bureau.
For a family of four with two children, living in extreme poverty would represent an income of just over $ 12,000 a year.
When the researchers factored in “labor supply responses” into their accounting for the child tax credit, they found that the mass exodus of labor would mean that the child poverty would only decrease by 22%.
The great poverty of children would remain unchanged.
Kamala Harris visited a daycare center in New Jersey on Friday as part of the Biden administration’s efforts to sell the $ 3.5 trillion Build Back Better plan to Americans
Also today, the Vice-President participates in a panel discussion on the importance of federal investment in child care
Biden’s child tax credit increase is the same as his temporary increases under the US bailout, which was passed to help the United States weather the COVID-19 pandemic.
It became the largest child tax credit in U.S. history when it was enacted in March, but is only in effect until 2021.
Now Democrats hope to make it permanent with their $ 3.5 trillion spending bill, which also includes funding for a free community college and historic Medicare and Medicaid extensions, among other reforms.
The bill has no Republican support and is pushed back by moderate Democrats who think the price is too high.
The president’s party hopes to pass the measure through the reconciliation process, which would allow it to pass a simple majority.
But with only a slim majority, Democrats – especially in the Senate – will have to vote at the same time to get it passed.
The study follows a dismal employment report in September.
Only 194,000 jobs were added to the payroll last month, well below the 500,000 that were expected, and offering one of the bleakest prospects in a year-round US jobs report.
Friday’s Labor Department report showed unemployment fell more than expected, from 5.2% in August to 4.8% in September.
Monthly job growth this year has averaged 561,000.
Supply chain bottlenecks and Covid-19 contributed to the unimpressive numbers.
Still, Friday’s Labor Department report showed unemployment fell more than expected, from 5.2% in August to 4.8% in September. Economists polled by Refinitiv expected the unemployment rate to fall to 5.1%.
The government does not count people as unemployed unless they are actively looking for a job, so some may have stopped looking. The number of unemployed fell to 7.7 million.
Republicans are calling the new employment numbers “pathetic” and say it’s proof his multibillion-dollar spending plans aren’t working.
The report was another blow after Biden scored his lowest approval rating to date – 38% – according to a new Quinnipiac poll.
Data for previous months has also been revised up – 38,000 jobs were added to July’s figures, bringing the number to 1.053 million, and August’s disappointment fell from 235,000 to 366,000.