Hillary Clinton,Child tax credit,Bill Clinton,Expense,Tax,Income tax,Child care,Tax deduction,Tax break,Poverty

Hillary Clinton Proposes Doubling Tax Break For Families With Kids

October 10, 2016
in Kids

Hillary Clinton often says she wants to help families struggling to pay for child care and other expenses that come with raising kids. Now she’s presenting a plan designed to do just that.

Clinton’s proposal would not fulfill her lofty, high-profile promise to set a hard limit on what families pay for child care. But the new plan would get part of the way toward that goal, giving millions of families significant financial relief along the way.

The initiative, which Clinton will formally unveil Tuesday, is pretty straightforward. She would double the size of the child tax credit, an existing break for both low- and middle-income families, for children 4 years old and younger. Then she wants to tweak the tax credit’s design, so that it provides more relief to some of the poorest families in America.

The initiative is part of a broader agenda to update America’s social welfare state, in order to accommodate a profound change in society over the last few decades ― the mass entry of women into the workforce, and resulting disruption to traditional childrearing arrangements.

Clinton has called for a suite of policies, including federally backed pre-kindergarten programs and paid family leave, and said she would limit child care expenses to 10 percent of family income. That would be no small thing, since the average cost of child care in the U.S. is now around $9,600 per year, according to a recent report from the New America Foundation.

Clinton’s expansion of the child tax credit would increase its maximum value from $1,000 to $2,000 per child. On its own, that’s not enough to hit the 10 percent goal for many families. Although the Clinton campaign has said she will introduce additional initiatives, it’s becoming clear that the 10 percent cap is not a concrete objective, as she has suggested previously, but an aspiration.

Even so, Clinton’s tax proposal represents a substantial new investment in families with children ― one that will, like other tax breaks Clinton has proposed, provide major benefits to everybody except the wealthy. That’s because the child tax credit is mostly refundable, meaning that families too poor to owe any income tax can claim the credit and receive a check from the government for its value. Clinton’s plan would actually make it even more valuable to the poorest families, by increasing its value at very low incomes.

This is pretty much the opposite of the approach that Donald Trump has taken with his tax policy in general, and his child care proposals in particular. Over the summer, Trump proposed a new tax deduction for child care expenses. But deductions are worth a lot more to people in higher income tax brackets ― and worth nothing at all to people too poor to pay income taxes.

Trump’s child care plan also includes a subsidy for low-income families, but it would be worth a maximum of $1,200 per family, regardless of the number of children.

Figuring out who would benefit more from each candidate’s proposals right now is basically impossible, since the Trump campaign has changed its tax plan several times, and Clinton is just now releasing details of her proposal. There’s bound to be a lot of variation, depending on individual household circumstances. But given the available information, it’s likely that Clinton’s would ultimately provide greater tax relief to less affluent families, while Trump’s would provide greater relief to more affluent ones.

Clinton’s plan would also cost a lot less than Trump’s and would fit within an overall budget that, according to an assessment by the Committee for a Responsible Federal Budget, has nearly enough new revenue to offset the cost of new initiatives. The same assessment found that Trump’s agenda, including his child care tax cut, would add $5.2 trillion to the federal debt over the coming decade.

The child tax credit gets relatively little attention, even in Washington. But policy experts who focus on children think it’s a critical tool for fighting poverty, because even modest amounts of money can make a big difference for low-income Americans ― and because research has shown that assistance for very young children can have profound effects on their future health and intellectual and emotional development.

If you’re trying to maximize the effect of where you put your dollars, it’s poor young kids, because it’s such a critical stage of brain development,” said Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities. ”It’s a moment of great vulnerability, but also great opportunity.

Clinton’s proposal has a lot in common with Democratic proposals circulating on Capitol Hill, including bills from Sen. Michael Bennet of Colorado, and Rep. Rosa DeLauro of Connecticut. But the child tax credit also has a long history of bipartisan support.

It dates back to bipartisan legislation that President Bill Clinton signed, and it has undergone expansion and extension several times, under President George W. Bush and most recently President Barack Obama ― who, late last year, signed a bill making recent expansions of the tax credit permanent.

This story has been updated to clarify that the doubling of the child tax credit would apply only to young children.

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