Killing the Child Tax Credit is a middle-class tax hike in disguise

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Republican leaders are pitching a curious New Year’s resolution: Let’s raise taxes on middle-class families.

GOP lawmakers — aided by renegade Democrat, Sen. Joe Manchin (W.Va.) — have decided against renewing President Biden’s child tax refunds that have flowed to 36 million American families since last spring. 

Unless Biden can undo this apparent defeat, the president’s opponents will slash middle-class incomes by $6,200 on average in the coming year as tax refunds to families largely disappear.

Parents like Army officer Phillip Lacey, stationed overseas, treasured the relief stemming from Biden’s child credit, backstopping his wife and two young daughters living in Virginia. “For our family, our budget is not so tight,” Lacey told the Washington Post.

A Republican president, Gerald Ford, first deployed tax refunds to lift young families. By 1997, both parties rallied around a broader child tax credit, motivated by the traditional notion that parents can best decide on how to invest in their kids, rather than favoring any one form of child care.

But the original child credit mostly sliced tax bills for better-off families. So Biden tilted refunds toward true middle and low-income parents — the fair balance that Republicans and Manchin have ended for now.  

“The best Christmas gift Washington could give American families,” Senate Republican leader Mitch McConnell (Ky.) said, “would be putting this bad bill on ice.” So much for the Christian spirit.

Manchin now sides with the GOP, urging the elimination of middle-class tax relief, tipping the balance in the evenly divided Senate. Manchin complains of a “society moving towards an entitlement mentality,” yet one-third of all household income in his dirt-poor state comes from government transfers— due to fragile job growth and a shifting energy market, not the result of moral degradation.

Yet, it’s middle-class families — not impoverished parents — who benefit most from Biden’s child credit. If congressional Republicans block the extension of these refunds, taxes on middle-class parents will ratchet up as they’re faced with a winter of escalating prices, from gas to groceries.  

Biden’s tax refunds have slashed family poverty by one-third nationwide, a remarkable achievement. Still, his child credit flows to a larger share of white middle-class families — 4 in 5 eligible parents — than to any other income group, as revealed in two national surveys my research team helped to design, run by Ipsos, the nonpartisan polling firm.

These true middle-class Americans — earning between $50,000 and $75,000 yearly — draw the largest tax refund, averaging $520 monthly, nearly one-fifth more than what poor families receive. It’s middle-class parents who will take the biggest hit if Biden cannot resuscitate tax relief.

Tax refunds received by low-income parents can exceed their federal tax bill under Biden’s policy. This smells of income distribution for some conservatives. But poor families pay plenty in local sales, property and payroll taxes — totaling one-fifth of their yearly wages on average. Even undocumented immigrants pay $15 billion in Social Security taxes each year, which helps us all. 

Ample evidence details how these tax refunds go for household essentials, like food, clothes for kids and paying child-care bills so parents can get to work. But Manchin and “pro-family” Republicans seem content in shrinking parents’ capacity to raise their children in a healthy fashion, thereby reducing long-term social welfare costs. 

Luz Garcia toils at three part-time jobs east of Los Angeles, raising three daughters with her equally busy husband. “These checks make sure my bank account isn’t going to overdraft,” Garcia said. Her tax refund, just $300 a month, offers “a little cushion” and buoys her kids.

Garcia rented a saxophone for her youngest, who wanted to join the school band. But if Republican leaders, joined by Manchin, raise Garcia’s tax bill in the new year, she will be forced to return it.

Bruce Fuller, professor of education and public policy at the University of California, Berkeley is the author of “When Schools Work.”

Tags Child tax credit Internal Revenue Service Joe Biden Joe Manchin Tax credit Tax refund Taxation in the United States

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