Democratic presidential nominee Hillary Clinton is proposing to revamp and expand the child tax credit to provide more benefits for low-income families and for eligible families with children age 4 and under.
Ms. Clinton's proposal would double to $2,000 per child the amount of the credit that's available to families of young children. It currently tops out at $1,000 per child for families that meet income guidelines. Her proposal would also expand the credit's “refundability” — or the portion of it that can be refunded to those who owe no income tax.
“Under our current system, millions of families do not qualify for the full credit or get very little benefit because they simply do not make enough money,” Ms. Clinton's campaign said in a statement. Current law requires families to exclude the first $3,000 of their earnings before they're eligible for a refund. Ms. Clinton's plan would eliminate that exclusion.
Eligibility for the child tax credit is based on income and number of children. Couples with two children and incomes above $110,000 receive smaller credits; those with incomes above $150,000 don't receive any.
“Hard-working, middle-class families are struggling with rising costs for child care, health care, care-giving and college,” Ms. Clinton said in the news release. “This new tax credit will make their lives a little bit easier and help restore fairness to our economy.” The news release called the expansion of the child care credit “a down payment on further relief for middle-class families.”
It's unclear how much the plan would cost. The campaign's news release said it would be “fully paid for by her proposals to ensure the wealthy, Wall Street and big corporations pay their fair share.” But an analysis by the nonpartisan Committee for a Responsible Federal Budget last month found that Ms. Clinton's plan was already on track to add $200 billion to the federal debt over 10 years. That calculation came before her plan to enhance the child tax credit was announced.
Ms. Clinton and Republican nominee Donald Trump have tangled over whose tax plan provides more benefits for the middle class. Ms. Clinton hasn't proposed an income-tax rate cut for the middle-class, but she has proposed benefit programs and tax breaks that would help such families with the costs of education, child care and caring for ill and aging family members.
(More: Hillary Clinton vs. Donald Trump: Who are you voting against?)
CONTRASTING PLANS
Her plans for tax increases are focused on the wealthy and high-wage earners. They include requiring anyone making $1 million or more in annual income to pay a minimum income-tax rate of 30% and levying a 4% surtax on annual incomes of $5 million or more.
Mr. Trump has proposed consolidating the existing seven marginal income-tax rates to three and generally lowering those rates, to 12%, 25% and 33%. Mr. Trump's website says his plan would “reduce taxes across-the-board, especially for working and middle-income Americans who will receive a massive tax deduction.” He also has proposed making child-care costs tax deductible for children under age 13 — and offering spending rebates for child-care expenses to low-income taxpayers.
The right-leaning Tax Foundation, an independent policy group in Washington, found in an analysis that Mr. Trump's plan would benefit high-income taxpayers more than others. The bottom 80% of taxpayers would see no more than a 1.9% increase in after-tax earnings, the group found. The top one-fifth would see growth of at least 4.4%, and the top 1% would see growth of at least 10.2%.
In addition, a New York University law professor's analysis found that more than half of single parents and one-fifth of families with children could see their federal taxes increase under Mr. Trump's plan.
(More: Advisers call Trump prudent with taxes in avoiding years of payments)
A married couple with three children making $50,000 a year would “face a tax increase of $450,” wrote NYU professor Lily Batchelder, a former tax specialist for President Barack Obama's administration and the Senate Finance Committee. A single parent making $75,000 with two school-aged children and no child-care costs “would face a tax increase of $2,440,” she wrote. Her analysis accounted for child-care tax benefits that Mr. Trump recently adopted.
Mr. Trump's campaign called Ms. Batchelder's analysis “pure fiction” that left out portions of his plan. However, an economist at the Tax Foundation gave Ms. Batchelder's findings a qualified endorsement.
“We were able to replicate many of the numbers in the report,” said Kyle Pomerleau, director of federal projects at the Tax Foundation, in a Twitter posting. “The results seem reasonable to me.”
