Bennet, Brown Introduce Major Proposal to Cut Taxes for Families with Children

Legislation Would More than Triple the Child Tax Credit for All Children, with an Additional Boost for Young Children

Washington, D.C. - U.S. Senators Michael Bennet (D-CO) and Sherrod Brown (D-OH) today introduced the American Family Act of 2017 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 would create a new $300 per-month, per-child credit for children under 6 years of age and a $250 per-month, per-child credit for children 6 to 18 years of age-tripling the credit for all children and, for the first time, making the credit fully refundable. The introduction comes on the heels of Ivanka Trump's Wednesday visit to Capitol Hill to announce her Child Tax Credit proposal.

"Far too many parents are struggling to make ends meet, with paychecks that don't stretch far enough to deal with the rising costs of raising a child," said Bennet. "The evidence is overwhelming: children perform better in school, are healthier, and are more likely to succeed in the economy of the future if their parents can afford to raise them in an environment that allows them to thrive. This bill would help relieve the substantial financial burdens on parents in the middle class and those striving to make it there, allowing them to invest in our most important asset - our kids' future."

"Our tax policy should put real money back in the pockets of working families," said Brown. "That's how we lift up the middle class and grow our economy."

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 kids. This week, the Columbia University Center on Poverty and Social Policy released a report that found the Bennet-Brown proposal would cut child poverty nearly in half.

Specifically, the proposal would:

  • Create a New Expanded Credit for Children under 6. The bill would create a new Young Child Tax Credit (YCTC) of $300 per month ($3,600 per year) for kids under 6 years of age, up from the current maximum of $1,000 per year.
  • Increase the Maximum Child Tax Credit for All Children under 19. The bill would expand the Child Tax Credit (CTC) to $250 per month ($3,000 per year) for kids 6 years of age or older, up from the current maximum of $1,000 per year. The bill would also provide that tax credit for 17- and 18-year-old children, while the current CTC only allows a credit for children under 17 years of age.
  • 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 $3,000 of income and at a rate of 15 cents for every dollar of additional income up to the maximum of $1,000.
  • Maintain Existing Phase-Out Levels. The bill would begin phasing each of these credits down at the same income levels as the current CTC (starting at $75,000 for single taxpayers, $110,000 for married taxpayers filing jointly).
  • 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 bill text is available HERE. A fact sheet is available HERE.

"As our team at Columbia University has written, moving towards a fully refundable Child Tax Credit would have a dramatic positive impact on children and their families, by enabling parents greater opportunities to invest in their children," said Jane Waldfogel, Compton Foundation Centennial Professor at the Columbia University School of Social Work. "It works in the United Kingdom and Canada and many other countries - and it's high time for it to work here too."

"The Child Tax Credit has become a critical component of the modern safety net but currently does little for the most vulnerable children," said Christopher Wimer and Sophie Collyer, authors of a report on the Bennet-Brown proposal from the Columbia University Center on Poverty and Social Policy. "Our new analysis shows that the Bennet-Brown bill would make major headway addressing this shortcoming, cutting child poverty nearly in half and virtually eliminating extreme child poverty in the United States."

"Simple, evidence based; this bill would put a major dent in child poverty," said Kathryn Edin and H. Luke Shaefer, co-authors of $2.00 a Day: Living on Almost Nothing in America. "It would effectively end $2.00-a-day poverty among America's families with kids. Thank you to Senators Bennet and Brown for offering a bold vision of what we can all do together for our most vulnerable children."

"The Niskanen Center applauds Senator Bennet and Senator Brown for their proposal to create a fully refundable Child Tax Credit, delivered monthly to match the needs of families, and with additional resources provided for young children," said Samuel Hammond, Poverty and Welfare Policy Analyst for the Niskanen Center. "The United States has among the highest child poverty rates in the developed world, a fact which is largely explained by differences in tax policies like these. Indeed, the evidence from the more than twenty countries with per-child benefits, including countries with child allowances like Canada, Australia and the U.K., demonstrates that periodic cash transfers to households with children is the single most effective tool for reducing child poverty, improving family stability, and creating lasting improvements in child health and educational outcomes. The power of a child allowance lies in the flexibility and fairness provided by cash, which empowers parents to allocate resources to the diverse and often unpredictable needs of their children in ways other kinds of benefits simply cannot. Expanding parental choice, and reducing child poverty - particularly when done in a way guided by the best available evidence - are goals we are proud to stand behind."