September 27, 2017

The Big 6’s “Middle Class Tax Relief” is smoke and mirrors



For months, the “Big 6” tax reform negotiators have dropped hints that a Child Tax Credit (CTC) expansion would figure prominently in tax reform. Yet the release of today’s “Unified Framework” suggests it was all smoke and mirrors.

Here is what it says:

To further simplify tax filing and provide tax relief for middle-income families, the framework repeals the personal exemptions for dependents and significantly increases the Child Tax Credit. The first $1,000 of the credit will be refundable as under current law. … The framework also provides a non-refundable credit of $500 for non-child dependents to help defray the cost of caring for other dependents.

Parsing this carefully, the statement strongly implies that the CTC is being increased simply to offset the repeal of the personal and dependent exemptions. Most disappointingly, it explicitly states that there will be no improvement to the CTC’s refundability — that it will remain as it is “under current law,” up to and including the existing maximum credit size of $1,000.

Of course, without increasing the CTC’s refundable portion or eliminating the $3,000 minimum earning requirement, there is no way for this CTC expansion to reach the rural and working-class families that make up Trump’s so-called “forgotten America.” This contrasts with previous statements from the White House to the effect that they were considering making the CTC payroll-tax refundable, an idea which I applauded for being genuinely pro-poor.

This is not a good look for the White House, particularly after courting dozens of conservative organizations on the promise of tax relief for families. The backlash is just beginning: