The Child Tax Credit was a monthly payment program that was part of the Biden Administration’s American Rescue Plan. Implemented in March 2021, it provided monetary support to millions of American parents in the form of monthly payments of up to $350 a month per child, regardless of the parents’ work status and phasing out at higher incomes. In the first month that payments went out, the child poverty rate dropped by 26 percent. Parents reported being able to pay down debts, buy more food, pay for child care, and manage their financial lives. Since the program expired in December, the financial situation of millions of families has been grim — 3.7 million kids fell back into poverty by late January, just a month after the payments expired. The Child Tax Credit would have been renewed in 2022 as a part of President Biden’s Build Back Better plan, but hopes of the renewal were destroyed as the overall BBB plan fell apart. Mitt Romney’s plan, known as the Family Security Act 2.0, builds on a previous bill the Senator introduced in 2019 that was the first-ever Republican-sponsored cash child benefit. It would give parents up to $15,000 a year in monthly cash payments. But the bill Romney introduced just recently has some key changes from the 2019 version, and they make a big difference. Here’s what to know.
Here’s How The Child Tax Credit Plan Would Function
In Romney’s Family Security Act 2.0 Plan, families would receive up to $350 per month for children up to age five (or $4,200 a year per child), and $250 for children age six to 17 (or $3,000 a year per child). Families with multiple kids would get their benefits capped at $1,250 per month or $15,000 per year. Reporting on the 2019 version of the plan, Vox found it would cut child poverty by “nearly 14 percent across the board” and would lift more than five million people out of poverty. (By way of comparison, the Child Tax Credit plan we had in 2021, that we could simply re-enact, cut monthly childhood poverty by 30 percent.) On the surface, Romney’s plan seems incredibly generous. It provides more money than parents received from the 2021 Child Tax Credit and has no end date. The 2021 Child Tax Credit was only enacted for six months of monthly payments and a lump sum of cash sent to parents at tax-filing time. But there are, in fact, some strings attached.
There Are Drawbacks
The Family Security Act 2.0 would exclude the poorest American families and, as a “deficit-neutral” plan, would do away with existing tax breaks and social spending programs like the Earned Income Tax credit, Temporary Assistance for Needy Families, Head of Household tax filing status, the child and dependent care tax credit, and the state and local tax deduction (SALT), all of which are designed to assist low-income Americans. The money currently used to fund those programs would be rolled into the FSA 2.0, with the goal of not only not increasing the deficit but spreading the support more widely. The FSA 2.0 also has a work requirement. That means parents who are unemployed for whatever reason wouldn’t be eligible for the monthly income, and, unlike the Child Tax Credit, the payments are not a refundable tax credit. The program will be phased in based on income. To qualify for the full benefit, families would have to earn at least $10,000, ostensibly to encourage participation in the workforce. Caregiving has tremendous economic value. And even so, low-income parents, who often work more unpredictable jobs or non-traditional shift hours, could become disqualified from the Romney tax credit benefits because they lose their job unexpectedly, meaning they could experience the double whammy of losing their income and losing their monthly child tax credits. The proposal also financially rewards marriage, at a time when about 4 in 10 kids are born to single moms. Twenty-three point four percent of single moms are living in poverty. Despite that, it’s easier to get more money if you’re in a two-earner household. Each person could make $5,000 per year to meet the $10,000 income threshold to get the full benefit, but for single parents, the onus of earning that $10,000 falls squarely on their shoulders. Parents who earn less than $2,500 per year would not be eligible for the program at all, as it’s based on taxable income, and $2,500 is the threshold to file taxes. The poorest families in the country would not benefit, which is supposed to encourage them to find a job. The 2021 Child Tax Credit allowed people who earned too little to file federal taxes to take part. In other words, there are problems with the plan. In terms of money itself, the Family Security Act 2.0 is generous and ambitious. But it leaves out those who might need the help the most and comes at the cost of getting rid of essential social safety net programs. At the same time, there’s already a child tax credit plan we’ve tried once before. And it was pretty successful.
