Senate Democrats Propose Major Expansion of Federal Tax Credits
By Devin Simpson
Today, more than 40 U.S. Senators unveiled a plan to boost income for low-wage workers and families by significantly expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
Senators Sherrod Brown (D-OH), Michael Bennet (D-CO), Dick Durbin (D-IL) and Ron Wyden (D-OR) led 44 Senators in introducing the Working Families Tax Relief Act, which would increase the federal EITC for families with dependent children by roughly 25 percent, improve the credit for workers without dependent children, and expand the credit’s eligibility requirements to include workers aged 19 and older and below the age of 67.
Acknowledging that tax-time refunds often arrive often too late to help Americans living paycheck-to-paycheck respond to emergencies, the bill includes a provision to allow recipients to claim $500 of their EITC in advance. The legislation would also make the CTC fully refundable and create a Young Child Tax Credit worth $1,000 for families with children under six.
What’s more, the Working Families Tax Relief Act would extend the CTC eligibility requirements to Puerto Rican families with children, and doubles the size of Puerto Rico’s current EITC. The bill would also allow the IRS to regulate paid tax preparers to help reduce fraud and ensure higher rates of accuracy.
The proposed legislation would boost income for 46 million households and lift 7 million people out of poverty, according to the Office of Sen. Brown. Prosperity Now, a research organization dedicated to promoting financial security among low-income Americans, called the bill “one of the most ambitious proposals to turn the tax code right-side up to support working families.”