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What is the Child Tax Credit? And how much of it is refundable?

The Child Tax Credit, which has been expanded significantly by Congress since it was first written into law nearly 25 years ago, is a significant element of the federal government’s effort to aid families with children. Families currently are eligible…

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By David Wessel

The Child Tax Credit, which has been expanded significantly by Congress since it was first written into law nearly 25 years ago, is a significant element of the federal government’s effort to aid families with children. Families currently are eligible for a tax credit of up to $2,000 per child under age 17. President Biden proposes to expand the credit, which would, if Congress goes along, substantially reduce the number of children living below the poverty line.

How does the child tax credit work under current law?

Eligible families can claim a tax credit – which reduces income taxes they owe dollar-for-dollar – of up to $2,000 per child under age 17 who is a citizen of the U.S. The size of the credit is reduced by $50 for every $1,000 of adjusted gross income above $200,000 for single parents and $400,000 for married couples.

Families who owe little or no income tax can get cash of up to $1,400 per child, a feature which makes the tax credit partially “refundable,” in the jargon of Washington.

Other dependents – including children ages 17 and 18 and full-time college students ages 19 to 24 – are eligible for a non-refundable credit of up to $500.

Who benefits from the tax credit today?

More than 48 million households are expected to claim the Child Tax Credit for 2020, according to the Joint Committee on Taxation of Congress. This will amount to $117.5 billion for qualifying families – twice the amount provided by the Earned Income Tax Credit, a program which supplements the wages of low-paid workers.

Although important to the low-income families who get it, and often promoted as a way to fight poverty, the Child Tax Credit is not targeted at those families, particularly after the changes made in 2017. About 40% of that $117.5 billion will go to households with incomes above $100,000. A relatively small share goes to low-income households – 15% will go to households with incomes under $30,000.

Who gets the Child Tax Credit in 2020_by income

What is President Biden proposing?

President Biden would increase the credit from $2,000 to $3,600 for children under age 6 and to $3,000 for children under age 18, and he would make it “fully refundable,” meaning that low-income families would get the full amount even if they don’t owe any income taxes. He proposes to do this only for one year, reducing the price tag, but fans of the tax credit both inside and outside the Biden administration say they hope the expansion would be renewed after the first year.

The Center on Budget and Policy Priorities estimates that the Biden proposal would benefit 27 million children (roughly half of all Black and Latino children) whose families don’t get the full credit now because they don’t have enough income – including nearly 10 million who are currently below the poverty line. And the Center on Poverty and Social Policy at Columbia University says this would reduce the poverty rate among children under 18 from 13.6% to 7.5% (using the Census Bureau’s Supplemental Poverty Measure, which takes account of government aid that isn’t counted in the official poverty rate).

How has the Child Tax Credit evolved over the years?

The credit has its roots in a 1991 report by a bipartisan National Commission on Children, which declared that “it is a tragic irony that the most prosperous nation on earth is failing so many of its children” and recommended a $1,000 refundable credit for all children through age 18. A version of the credit was proposed by Republicans in their 1994 Contract with American and by President Clinton in 1995, and was eventually enacted in 1997 as a $500-per-child, non-refundable credit aimed at middle and upper middle income families.

After George W. Bush promised to double the credit as part of the tax cuts he proposed during his 2000 campaign, my Brookings colleague Isabel Sawhill argued for making it refundable so it would aid poor children. This would be, she wrote, controversial. “Many Republicans, in particular, are likely to label it as social welfare by another name. Democrats will point out that, without some refundability, income tax cuts do little to help many Americans.” But it was one way, she argued, to make sure that at least some of the benefits of the Bush tax cuts went to low-income families. When Congress enacted the Economic Growth and Tax Relief Reconciliation Act of 2001, it both doubled the Child Tax Credit to $1,000 per child and made it partly refundable.

The credit has been altered several times since – for more on the legislative history, see this Congressional Research Service report. It was expanded significantly in the 2017 Tax Cuts and Jobs Act, largely at the insistence of Sen. Marco Rubio (R-FL). That law increased the size of the credit for many (though not all) families, boosted the maximum portion of the credit that is refundable, and made many more upper-middle-income families eligible. (The credit is currently reduced gradually for single parents with incomes of more than $200,000 and couples with incomes of more than $400,000; under the prior law, the thresholds were $75,000 for single parents and $100,000 for couples.)

Total value of Child Tax Credit_adjusted for inflation_1998-2020 (1)

What are the politics of the Child Tax Credit?

Expanding the credit has been popular with both Democrats and Republicans in part because assisting low-income and middle-class families with children is regarded by members of Congress as both politically appealing and economically prudent.

Senators Mike Bennet (D-CO) and Sherrod Brown (D-OH) and Representatives Rosa DeLauro (D-CT) and Suzan Delbene (D-WA) have introduced legislation, the American Family Act, that would expand the Child Tax Credit from $2,000 to $3,000 per year for children between the ages of 6 and 16, and to $3,600 for younger children – and make it fully refundable. As written, their bill would reduce the benefits currently available to upper-income families, phasing out the credit beginning at $130,000 for single parents and $180,000 for couples (and eliminating it altogether for single parents with incomes above $150,000 and couples with incomes above $180,000). The American Family Act is popular among Democrats; about three-quarters of the Democrats in the last Congress were co-sponsors. It’s similar to the Biden proposal, though it would shrink the number of upper-income families who can claim the credit.

During the pandemic, the House included a one-year expansion of the credit in the 2020 HEROES Act; the Senate didn’t go along. That approach to COVID relief appealed to some conservative analysts, partly because it was more targeted than sending a check to nearly every household (as Congress eventually did). In the Fall of 2020, a group of conservative scholars and leaders endorsed an additional, one-year, fully refundable Child Tax Credit of $2,000 in an open letter to Congress: “At a time when family budgets are under great stress and many parents have stopped working to care for their children, enlarging the child credit would offer much needed relief.”

In another indication of the credit’s bipartisan appeal, Sen. Mitt Romney (R-UT) joined Sen. Bennet in December 2019 in proposing a compromise that, among other things, would create a new Young Child Credit of $2,500 for children up to age 6, of which $1,500 would be refundable. It would also expand the refundability of the current credit for older children.

 

 

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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