Sen. Chris Coons on March 7 co-sponsored the American Family Act of 2019 to overhaul the existing Child Tax Credit and make it a dramatically more effective tool for supporting middle-class families with kids and reducing child poverty.
The bill was introduced with 36 original Senate cosponsors and 174 original House cosponsors, indicating a major show of support from across the Democratic Caucus.
The bill would create a new $300 per month, per-child credit for children younger than 6 years of age and a $250 per month, per-child credit for children younger than 17 — increasing the credit for all children and, for the first time, making the credit fully refundable.
“I am proud to work with my colleagues in introducing the American Family Act to improve the Child Tax Credit, a powerful anti-poverty tool that helps working parents with children,” said Coons. “Unfortunately, the Republican tax bill was tilted in favor of wealthy individuals. This bill, as part of a broader tax reform that maintains or increases revenue, has the potential to cut our country’s child poverty rate nearly in half and virtually eliminate the share of children living in extreme poverty. This would create lasting improvements in child health and educational outcomes, and I look forward to advancing this family-based legislation.”
The American Family Act would replace the current Child Tax Credit with an expanded version based on the latest research about what works to improve outcomes for children. The Columbia University Center on Poverty and Social Policy recently released a report that found the American Family Act would cut child poverty by 38 percent.
Specifically, the legislation would:
— Create a new expanded credit for children younger than 6. The bill would create a new Young Child Tax Credit of $300 per month, or $3,600 per year, for children younger than 6 years of age, up from the current maximum of $2,000 per year.
— Increase the maximum child tax credit for all children younger than 17. The bill would expand the Child Tax Credit to $250 per month ($3,000 per year) for children 6 years of age or older, up from the current maximum of $2,000 per year.
— Make both credits fully refundable. The bill would make both the YCTC and CTC fully refundable, meaning that all low-income families would receive the full credit for each child. The current CTC only begins to phase-in after a taxpayer has earned $2,500 of income and at a rate of 15 cents for every dollar of additional income. In addition, only $1,400 of the $2,000 credit is refundable. For these reasons, one-third of all children — 27 million — do not currently receive the full $2,000 CTC credit.
— Benefit the middle class. The bill would provide a tax credit for all individuals with children who earn less than $150,000 per year and all married couples with children who earn less than $200,000 per year.
— Index the credit for inflation. The bill would index both YCTC and CTC levels for inflation, rounding to the nearest $50, to preserve the value of the credit going forward. The current CTC is not indexed for inflation.
— Set up advance payments on a monthly basis. The bill would call on the treasury secretary to set up monthly advance payments for the YCTC and CTC no later than a year after passage for taxpayers anticipated to receive a refund. Monthly payments would smooth families’ incomes and spending levels over the course of a year, helping them make ends meet during difficult months.
The text of the bill is available at bit.ly/2SPrPum.