Legislators in the House of Representatives pushed a bill forward that seeks to restore a COVID-19-era tax break for American families.
U.S. Representatives Rosa DeLauro, D-Conn., Suzan DelBene, D-Wash., and Ritchie Torres, D-N.Y. recently introduced the American Family Act of 2023, which, if passed, would restore the expanded, monthly Child Tax Credit (CTC) to parents and kids across the U.S.
"When we expanded and improved the Child Tax Credit in 2021 under the American Rescue Plan, it provided unprecedented economic security for American families," DeLauro said in a statement. "It was the largest tax cut for middle-class and working families in generations."
Eligible taxpayers received monthly payments of up to $300 per child under President Joe Biden's American Rescue Plan to provide families with financial and economic relief during the COVID-19 pandemic. Families that qualified for the payments but did not receive them in advance could claim the full credit on their 2021 tax return during the 2022 tax filing season.
This year, however, the tax credit returned to 2019 levels. So filers that qualified for a $3,600 per dependent in 2021 got a credit of $2,000 in 2022 for each qualifying child under age 17, or less, depending on their income.
"In 2021 alone, the expanded Child Tax Credit reached more than 61 million children and lifted nearly four million of them out of poverty," Torres said in a statement. "No government program has impacted so many Americans in such a short amount of time."
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With the CTC expired, roughly 19 million children under age 17 get less than the full Child Tax Credit or no credit at all in 2023 because their families earn too little, according to a report from the Center on Budget and Policy Priorities (CBPP).
The Republican-sponsored tax package recently introduced by the House Ways and Means Committee does not include an extension of the Child Tax Credit, and an amendment proposed by DelBene that would have added CTC to the package was blocked by Republican lawmakers.
"Congress should not expand any business tax breaks without including a robust expansion of the Child Tax Credit that would make the full credit permanently available to children in families with low incomes," the CBPP said. "This would substantially reduce child poverty at a modest cost.
"Making the full $2,000 current Child Tax Credit available to children in families with low incomes or without any earnings in the year would have a modest cost of roughly $12 billion per year through 2025 – far less than the combined cost of tax breaks corporate lobbyists are pushing," the CBPP continued.
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Inflation has moderated since hitting a record high last June, but Americans continue to deal with high prices. The latest Consumer Price Index showed inflation grew 4% in May, down from a rate of 4.9% in April, according to the Bureau of Labor Statistics. Housing, used vehicles and food costs all increased in May.
Rising costs have pushed more Americans to rely on their credit card to make ends meet, according to a recent study by PYMNT and Elan Financial Services. The study said that 33% of cardholders shifted to using them more in the last six months, and 43% of those that increased their use of credit cards were experiencing very or extremely adverse effects of inflation.
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