Washington, DC - Colorado U.S. Senator Michael Bennet introduced a bill to update and modernize the child tax credit for hardworking middle-class and low-income families. The Child Tax Credit Improvement Act would index the credit to inflation, increase the value of the credit for families with young children, and allow families to receive a larger refund from the credit on their tax returns.
"Colorado's economic recovery is as strong as any state's in the nation, but decades of flat wages is squeezing working families," Bennet said. "We've heard from parents across the state who are doing everything they can to pay the bills, put food on the table, and afford the rising costs of housing and education. They don't want to work less or take something for free. They are committed to working hard, moving their families forward, and providing opportunity for their kids. Congress needs to find ways to support that commitment. This bill will makes commonsense changes to ensure the child tax credit is helping millions of American families boost their financial security when they need it most."
According to the Center on Budget and Policy Priorities, in 2013, the child tax credit kept 3.1 million people out of poverty. This includes approximately 1.7 million children. In Colorado, approximately 307,000 households qualified for the child tax credit. Between 2000 and 2014, median household income in Colorado dropped by approximately $5,000.
The Child Tax Credit Improvement Act would increase the credit for families with young children. The bill would triple the credit to up to $3,000 for children under the age of six. A recent analysis by the Center for American Progress shows that child-related costs account for nearly 70 percent of the increasing living expenses for middle-class families. Increasing the value of the credit for younger children will help parents account for the needs of children early in their lives.
The bill also enables taxpayers to receive the refundable portion of the child tax credit for every dollar earned. Under the current law, an individual is entitled to receive the refundable portion of the child credit totaling 15 percent of his or her earnings in excess of $3,000 (totaling up to $1,000). Bennet's bill would eliminate the $3,000 threshold to enable all working parents to take advantage of the credit. Parents with children under six would receive a credit totaling 45% of their earnings if the full credit exceeds their income tax liability.
Finally, the bill indexes the amount of the credit for inflation, which ensures that the credit retains its value over time.
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