Legislation Will Expand Important Tax Credits While Helping To Grow Economy
Washington, D.C. - Colorado U.S. Senator Michael Bennet reintroduced legislation, cosponsored by more than 40 senators, that would expand two anti-poverty tax credits that help put money back in the pockets of working Coloradans and families. Bennet reintroduced the Working Families Tax Relief Act to expand access to and the value of the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC).
"Far too many kids in America grow up in poverty, which often limits their future opportunities," Bennet said. "We know that when kids are in financially-secure families, they are healthier, perform better in school, and are more likely to thrive later in life. That's why expanding the Child Tax Credit for families with young children is not only a moral obligation to our kids, but also the right thing to do for our economy. Similarly, the bill's reforms to the Earned Income Tax Credit would encourage work, grow our economy, and help workers make ends meet."
Together, the CTC and EITC help lift Americans out of poverty. The CTC can be claimed by taxpayers with children and provides up to $1,000 per child under age 17. In 2015, the CTC lifted 1.6 million children out of poverty. The EITC is a refundable tax credit for low-income Americans, therefore encouraging work by supplementing earned income and helping families become more financially stable.
Bennet has long been an outspoken advocate for improving the Child Tax Credit, introducing the Child Tax Credit Improvement Act in 2015.
The Working Families Tax Relief Act would:
1. Strengthen the Child Tax Credit for Families with Young Children: The bill builds on the proven success of the CTC to lift children out of poverty. The legislation will focus on the most vulnerable children by allowing taxpayers to claim a refundable credit equal to 45 percent of each dollar earned up to a maximum credit of $3,000 per-child under six years of age.
2. Expand EITC for Childless Workers: The current EITC for a full-time, minimum-wage worker not claiming children is $27 - making workers who do not claim children the only group of taxpayers that can be taxed into poverty. This bill would reduce the age limit to qualify for the EITC from 25 to 21 and expand the size of the credit so the same full-time, minimum wage worker would earn a refundable credit of approximately $913.
3. Index the CTC to inflation: A recent study from Columbia University concluded that if the CTC is not indexed, 750,000 children under 17 and their families will fall below the poverty line by the end of the decade. This bill would index the maximum CTC and the income thresholds at which the credit begins to inflation.
4. Make it easier to claim the EITC: The bill would simplify the complicated rules for how parents who are separated can claim the EITC and allow filers who live with a qualifying child, but do not claim the child for the EITC, to claim the childless EITC.