Biden Wants to Expand the Child Income Tax Credit. What Does That Mean?
Here is how keeping an expanded version of the credit around could result in more checks to families to help raise their children.
In his address to Congress on Thursday, President Joe Biden outlined in broad strokes the “American Families Plan.” This plan, Biden’s signature proposal to benefit families in the aftermath of the post-coronavirus economic recovery, is estimated to cost roughly $2 trillion, a major sticking point for political opposition. However, the measures contained within are broadly popular; in the aftermath of the speech, an estimated 85% of Americans, per CBS polling, approved of the speech.
One of the most significant measures in the American Families Plan was an expansion of the Child Income Tax Credit. Biden proposed to raise the benefit from $2000 per child per year, its 2020 level, to $3000 to $3600, depending on the child’s age. Although this expansion had already been passed in 2020 under the Trump administration, it was then intended as a one-year coronavirus relief measure—Biden’s proposal would extend the increases until 2025, effectively making them regular policy rather than an emergency relief measure.
What does this expansion mean? Under Biden’s proposal, if a married couple makes $150,000 per year or less (or a single parent makes $75,000 or less), the government will provide a tax credit of $250 per month for children between the ages of 6 and 17, and $300 per month for children under the age of 6 – respectively adding up to $3000 and $3600 per year. While this would not benefit many Americans without children or with adult children, for working families with children below the age of seventeen, it would essentially amount to an additional annual stimulus check.
These benefits are significant on their own. However, they are only the beginning of the many benefit proposals that the American Families Plan seeks to implement. Other areas of significant interest include the expansion of Medicaid, the implementation of paid family leave, and—perhaps most importantly for young people—the prospect of free community college.
As Biden outlined this vision, he suggested that it would be paid for through tax increases on America’s ultra-wealthy, particularly with the implementation of a significant increase in capital-gains taxes, which wealthy Americans benefit from at significantly higher rates. However, these proposals remain controversial in Congress, particularly among Republicans, who remain universally opposed to the issue of tax increases. Given this, and the shaky support of the Democratic coalition for these proposals—particularly conservative Democrats in red states—and the Senate’s unwillingness to kill the filibuster, it is unclear how much of the American Families Plan will actually become law.
Trevor Filseth is a news reporter and writer for the National Interest.